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Broadgate Market News 28/6

28 June 2012

Stocks rose on Wednesday as stronger-than-expected economic data helped lift energy stocks, overshadowing concerns a European Union summit will not yield tangible progress in easing the debt crisis.

The energy sector showed the strongest gains among the 10 major S&P 500 groups, rising 1.9 percent as oil prices settled higher at $80.21 a barrel. Cabot Oil & Gas Corp jumped 9 percent to $41.24 and was the biggest advancer on the S&P 500.

Worries about Europe have fed dramatic selloffs in stocks lately, but the declines have been tempered by enough short-term buying to keep the market confined to a range.

Sentiment was helped by better-than-expected sales of long-lasting U.S. manufactured goods in May, although excluding transportation and defense items, orders were down.

In other data, signed contracts for home purchases jumped to a seven-month high. The PHLX housing sector index climbed 3 percent, taking the year-to-date gains near 26 percent.

Shares of Lennar Corp, the third-largest U.S. homebuilder, rose 4.8 percent to $28.70 after it reported a rise in new orders for the fifth straight quarter.

“Sentiment is pretty negative. When you get people this depressed, markets have a tendency to bounce and that is pretty much where we are at right now,” said Doug Foreman, director of equities at Kayne Anderson Rudnick Investment Management, an affiliated manager of Virtus Investment Partners in Los Angeles, California.

Arena Pharmaceuticals Inc’s surged 28.7 percent to $11.39 on news that U.S. health regulators approved the drugmaker’s pill to treat obesity, the first weight-loss drug in 13 years. The Nasdaq biotech index .NBI gained 1.5 percent.

But uncertainty remained ahead of the euro zone leaders’ summit, which begins on Thursday. Few anticipate anything concrete to emerge from the two-day meeting after German Chancellor Angela Merkel said debt sharing, an idea backed by France, Italy and Spain, would not happen in her lifetime.

Healthcare stocks were in focus heading into Thursday’s U.S. Supreme Court decision on President Barack Obama’s 2010 healthcare law. Some investors have their attention on stocks less likely to be affected by the ruling, such as large pharmaceuticals.

Many investors expect the requirement that uninsured Americans purchase health insurance to be overturned, “so people have had plenty of time to position their portfolios for that,” said Foreman.

The Dow Jones industrial average gained 93.32 points, or 0.74 percent, to 12,627.99. The Standard & Poor’s 500 Index advanced 11.89 points, or 0.90 percent, to 1,331.88. The Nasdaq Composite Index added 21.26 points, or 0.74 percent, to 2,875.32.

The market’s rise came on light volume of 5.75 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq. The daily average year-to-date is 6.84 billion.

Shares of Vivus Inc and Orexigen Therapeutics Inc jumped following the FDA approval of Arena’s obesity drug. The companies are also hoping to bring their medicines to market. Vivus shares were up 7.4 percent to $28.33 and Orexigen Therapeutics rose 20.3 percent to $4.92.

Some of Wall Street’s top analysts published their research on Facebook Inc, and most are cautiously optimistic. Facebook shares fell 2.6 percent to $32.32 after gaining more than 20 percent in the prior two weeks.

Advancing stocks outnumbered declining ones on the NYSE by 2,354 to 654, while on the Nasdaq, advancers beat decliners 1,766 to 706.

Commodities

Brent crude stayed above $93 per barrel on Thursday after rallying on an output cut by Norway and positive economic data from the United States, while investors eyed a summit of EU leaders that is unlikely to produce concrete measures to contain the bloc’s protracted debt crisis.

Brent crude was up 5 cents at $93.55 per barrel by 0425 GMT, after settling at $93.50 on Wednesday, the highest in just over a week.

U.S. crude is up for a third day at $80.53, 32 cents higher than the previous day’s close.

Gold edged up on Thursday after the euro showed some resilience ahead of a European Union summit, which is unlikely to deliver new measures to tackle the region’s debt crisis and may prompt investors to turn to the safety of the U.S. dollar.

Gold added $1.19 an ounce to $1,575.59 at 0251 GMT, having briefly risen above $1,581 on Wednesday on bargain hunting. The metal is on track for a more than 5 percent drop this quarter.

U.S. gold for August delivery fell $2.10 to $1,576.30 an ounce in thin trading

Currencies

The euro hovered near a three-week low against the U.S. dollar on Thursday as market players expected European leaders to struggle to agree on bold steps to solve the region’s debt crisis at their summit starting later in the day.

The single currency bought $1.2488, versus $1.2466 late in New York, but was still within reach of this week’s low of $1.24413. It remained off a high of $1.2748 set early last week.

That helped to lift the Australian dollar by around 0.3 percent on Thursday to a one-week high of $1.0121, though strong resistance is seen around $1.0130, a level representing the 61.8 percent retracement of its recent decline.

The Aussie hit a four-month high against the euro, which fell as low as A$1.2331.

The U.S. dollar fell 0.4 percent against the yen to around 79.40 yen largely due to month-end selling by Japanese exporters, but it stayed within its trading range of the past few days.

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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