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Tuesday, February 17, 2015

S&P 500 ends at record high on Greece hopes, as bonds drop

The S&P 500 ended above 2,100 at another record high as optimism grew that a debt deal would be reached with Greece and as bond prices sold off.

In a possible sign of progress for Greece, a source told reporters the country intends to ask for an extension of a loan agreement Wednesday. The report follows a collapse of deal negotiations on Monday, which led to European Union finance ministers pressuring the country to remain in an international financial rescue program.

Late in the session, though, broadcaster ZDF reported the German finance minister said an extension was not up for debate.

US Treasury debt prices sold off, pushing benchmark 10-year note yields to seven-week peaks, on expectations the Federal Reserve could bump up rates as early as June. Minutes from the last Fed meeting are due Wednesday.

Among the S&P 500's biggest positives, shares of Medical device maker Medtronic Plc, which last month completed the $49.9 billion purchase of Ireland-based Covidien Plc, rose 3.7 percent at $78.07. Medtronic reported a better-than-expected third-quarter profit, driven by solid growth in its cardiac and vascular business.

The Dow Jones industrial average rose 28.23 points, or 0.16 percent, to 18,047.58, the S&P 500 gained 3.35 points, or 0.16 percent, to 2,100.34, a record high. The Nasdaq Composite added 5.43 points, or 0.11 percent, to 4,899.27.

US-listed shares of the National Bank of Greece ended up 1.2 percent at $1.63 after falling more than 13 percent earlier in the session.

Shares of Transocean Ltd recovered to close flat $19.05 a day after the company slashed its dividend and said its chief executive stepped down.

Among decliners, Celsus Therapeutics plummeted 81.4 percent to $1.15 after the company's lead drug failed a mid-stage study. VBL Therapeutics Inc dropped 65.5 percent to $4.87 after it said it would stop developing its experimental inflammatory drug to fight ulcerative colitis and psoriasis.

A fragile Ukraine truce added uncertainty to the market. In eastern Ukraine, Pro-Russian rebels fought their way into an encircled government bastion and were battling street-to-street, all but dashing hopes that a European-brokered peace deal would end months of conflict.

About 6.2 billion shares changed hands on U.S. exchanges, below the 6.7 billion average for the last five sessions, according to BATS Global Markets.

NYSE decliners outnumbered advancers 1,776 to 1,337, for a 1.33-to-1 ratio; on the Nasdaq, 1,533 issues rose and 1,199 fell, a 1.28-to-1 ratio favoring advancers.

The S&P 500 posted 64 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 115 new highs and 22 new lows.

In Europe, Greek stocks fell, weighing on broader European indexes, after debt talks between Athens and its euro zone peers broke down, putting the country's future in the shared-currency bloc at risk.

The main Athens index fell as much as 4.7 percent after the open. It then recovered the lost ground only to drop once more, leaving it 2 percent down.

After the market close on Monday, Greece rejected a proposal for a six-month extension of its international bailout package as "unacceptable," setting it at odds with its creditors.

However, Greece said it was "cautiously optimistic" a deal would be found, and traders said that the market was pricing in the prospect of a last minute deal.

Greek banks dropped 9.3 percent early in the session, but recovered slightly and were down 5.1 percent.

In all, the Euro STOXX 50 was down 0.5 percent, while the pan-European FTSEurofirst 300 index closed up 0.18 percent at 1,504.86.. Shares were also hindered by some disappointing earnings reports.

Telecom Orange, which hit a four-year high on Monday, fell 2.6 percent after predicting operating profit would

fall slightly this year amid continued tough competition in its key home market of France.

Dutch logistics company TNT Express warned on Tuesday that it expected adverse trading conditions to continue

in its main western European markets this year after reporting a fourth-quarter net loss, sending its shares down more than 10 percent.

Among top risers, Danish jewellery maker and retailer Pandora surged 16.6 percent after it reported fourth-quarter operating profit above expectations and said its profit margin will rise in 2015.

In all, of the 35 percent of STOXX Europe companies to have reported earnings so far, 58 percent have beaten or met expectations.

Meanwhile, Japan's Nikkei share average fell today, retreating from a near eight-year high after talks between Greece and euro zone finance ministers on a new debt deal collapsed.

The Nikkei closed 0.1 percent lower at 17,987.09 points, hit by selling in index heavyweight stocks such as Fast Retailing Co, which contributed to a hefty 21 negative points to the index. The Nikkei retreated from a near eight-year high of 18,074.26 hit on the previous day.

However, the broader Topix added 0.2 percent to 1,462.07, the highest closing level since December 2007. The JPX-Nikkei Index 400 also advanced 0.2 percent to 13,264.48.

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