Stocks Bounce Back After Bleak Week
FOX Business: The Power to Prosper
Wall Street kicked off the week with a big rally as traders snatched up assets that were thrashed as the markets sold off over the past three weeks.
Today's Markets
The Dow Jones Industrial Average climbed 135 points, or 1.1%, to 12504, the S&P 500 gained 20.8 points, or 1.6%, to 1316 and the Nasdaq Composite soared 68.4 points, or 2.5%, to 2847.
The Dow, S&P 500 and the Nasdaq fell for the third week in a row last week. All three of the major market averages tumbled more than 7% over the period. In contrast to the weakness seen recently, the Nasdaq posted its best performance of the year on a percent basis on Monday.
Some of the sectors that performed the worst last week outperformed on the day. The basic materials sector had the biggest gains, followed by technology, financial and energy stocks. The weakest performers were traditional defensive sectors like utilities and telecommunications providers.
There were five trades in advancing shares for each in a declining stock on the New York Stock Exchange. Meanwhile, traders shed the safety of U.S. debt in search of higher yielding investments. The yield on the 10-year rose 0.034-percentage point to 1.736%. Volatility plummeted more than 11% as tracked by the CBOE's VIX.
Europe Still in Focus
One main driver has been the debt crisis in Europe. In particular, the growing probability that Greece will be forced to leave the eurozone as it grapples with painful austerity measures has rattled traders' confidence in the 17-member currency bloc.
At the Group of 8 meeting over the weekend, leaders representing some of the world's biggest economies agreed that economic growth, balanced by fiscal discipline, is an important goal. They also expressed their interest in Greece remaining in the eurozone. That shifted the focus somewhat off of the austerity that has weighed severely on many world economies -- especially those in the beleaguered eurozone.
The heads of state "made all the right noises," said Yusuf Heusen, a sales trader at IG Index in London. He cautioned, however, that "we've seen all of this before."
Many world markets kicked off the week on a positive note. The English FTSE 100 was up 0.7%, while the Euro Stoxx 50, which tracks eurozone blue chips, climbed 0.26%. Market participants struck a generally cautious tone, with no particular resolution coming from Greece ahead of elections there, and continued uncertainty about the state of the world's economy.
"There's a feeling that (the selling) went far enough last week," Heusen said. "The markets are almost in limbo at the moment."
In corporate news, shares of Facebook (NASDAQ:FB) tumbled 11% in their second day of trading, falling far below their issue price of $38 a share. Eaton (NYSE:ETN) unveiled plans to scoop up electrical parts supplier Cooper Industries (NYSE:CBE) for $11.8 billion.
Commodities were mixed on the day. The June crude oil contract jumped $1.13, or 1.2%, to $92.61 a barrel. Wholesale New York Harbor gasoline gained 1.8% to $2.94 a gallon.
In metals, gold slumped $1.60, or 0.1%, to $1,590 a troy once.
Foreign Markets
Eurozone blue chips gained 0.26%, the English FTSE 100 climbed 0.7% to 5304 and the German DAX rallied 0.95% to 6331.
In Asia, the Japanese Nikkei 225 drifted higher by 0.26% to 8634 and the Chinese Hang Seng dipped 0.16% to 18922.