On Wednesday, markets enjoyed their best three-day winning streak
in three months as investor sentiment was boosted by news that the
Greek austerity plan had been approved by the nation’s lawmakers.
This would not only enable Greece avoid a debt default but would
also help the global markets avoid bearish sentiments
The Dow Jones Industrial
Average (DJIA) moved up 0.6% to settle at 12,261.42. The Standard
& Poor 500 (S&P 500) jumped 0.8% to finish the day at
1,307.41. The tech-laden Nasdaq Composite Index settled at
2,740.49, after surging 0.4%. The fear-gauge CBOE Volatility Index
(VIX) slid 9.9% to settle at 17.27. On the New York Stock Exchange,
Amex and Nasdaq, consolidated volumes were 7.19 billion shares,
well below the daily average so far this year of 7.57 billion. The
breadth of the market was dominated by the advancers as for every
seven stocks that rose on the NYSE, only three were on the
declining side. For the week, the benchmarks are all trading in
positive territory with the Dow, S&P 500 and the Nasdaq up
2.7%, 3.1% and 3.3%, respectively.
Over the past three days,
markets have been able to recoup much of the losses suffered this
month, which was largely caused by fears of euro-zone debt crisis.
The Dow that fluctuated over and below the psychological level of
12, 000, looks fairly stable for the moment. Many had feared that
the S&P 500 would decline to its March low of 1, 250. But, the
index has now climbed over 1, 300 and is up 3.96% year-to-date.
However, the index is down 4.12% from its April high.
With not much happening on
the domestic front, the optimistic mood was primarily attributable
to news of the Greek parliament voting in favor of the austerity
plan which entails spending cuts, tax hikes and state asset sales.
Though violence broke out in Athens, the parliament voted 155 to
138 in favor of the austerity plan. The five-year plan that was
finalised by the European Union and the International Monetary Fund
last week, was a prerequisite for Greece to receive the next
installment of the country's bailout package. Greek Prime Minister
George Papandreou faced a formidable task as he attempted to push
through the austerity plan which was absolute necessary to prevent
a debt default.
On the domestic front, a day
after the S&P/Case-Shiller Home Price Indices presented a rosy
picture of the housing sector, it was time for the National
Association of Realtors (NAR) to lift the mood. The NAR reported a
significant rebound in pending home sales for May as it jumped 8.2%
to a reading of 88.8 in May from an upwardly revised 82.1 in April.
It was also up 13.4% from a reading of 78.3 in May 2010. NAR
reported all regions experienced an increase from a year ago,
pointing to higher housing activity in the second half of the year.
Lawrence Yun, NAR chief economist, said: “Some markets have made a
rapid turnaround, going from soft activity to contract signings
rising by more than 30 percent from a year ago, including areas
such as Hartford, Conn.; Indianapolis; Minneapolis; Houston; and
Seattle.”
In intra-day trading, markets
wobbled and threatened to lose their gains while the Nasdaq dropped
into the red, but strength from the financial, materials and energy
lifted the broader markets to ensure a finish in the green. Bank of
America Corporation (NYSE:BAC) was one of the leading gainers in
the financial sector after it reached a settlement with investors
regarding disputes related to mortgage securities. The bank’s stock
jumped 3.0% and other winners included, Citigroup, Inc. (NYSE:C),
The Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co.
(NYSE:JPM), Morgan Stanley (NYSE:MS), U.S. Bancorp (NYSE:USB) and
American Express Company (NYSE:AXP), gaining 3.4%, 2.5%, 2.3%,
4.8%, 1.9% and 2.6%, respectively.
Coming to materials stocks,
Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Western Copper
Corp. (AMEX:WRN), Newmont Mining Corp. (NYSE:NEM), Augusta Resource
Corp. (AMEX:AZC), Sterlite Industries (India) Ltd. (NYSE:SLT) and
Taseko Mines Ltd. (AMEX:TGB) gained 2.3%, 3.0%, 1.4%, 9.3%, 2.5%
and 5.2%, respectively.
Transocean Ltd. (NYSE:RIG)
lifted the energy sector, jumping 3.7%. Other gainers were Nabors
Industries Ltd. (NYSE:NBR), Helmerich & Payne Inc. (NYSE:HP),
Chevron Corp. (NYSE:CVX), BP plc (NYSE:BP), Hess Corporation
(NYSE:HES) and Suncor Energy Inc. (NYSE:SU) and they were up by
1.0%, 2.3%, 0.9%, 1.7%, 2.1% and 1.2%, respectively.
AMER EXPRESS CO (AXP): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
FREEPT MC COP-B (FCX): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
HELMERICH&PAYNE (HP): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
NABORS IND (NBR): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
STERLITE INDUST (SLT): Free Stock Analysis Report
TASEKO MINES LT (TGB): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
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