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Stocks stage big comeback amid crisis


Business News. Actions, Banks, Investments, Stock exchangeStocks continued to take their cues from Europe's troubled debt market on Tuesday, staging a comeback rally as volatile Spanish bond yields came off earlier highs.

The Dow Jones industrial average closed Tuesday up 163 points, erasing Monday's 143-point drop.

Trading has been choppy this week as investors agonize over the effectiveness of the $125 billion bailout for Spanish banks agreed over the weekend.

Economically sensitive cyclical sectors that had sold off recently were the strongest performers Tuesday, suggesting investors were seeing value in the market, while traders were looking for an oversold bounce as the S&P 500 slipped back toward 1,300.

"We are watching and waiting to see what comes out of Europe just like everyone else," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

The S&P 500 index lost 6.3 percent in May on concerns about the European financial crisis and signs of a U.S. economic slowdown.

Even after the EU aid package for Spain agreed over the weekend, the S&P fell more than 1 percent on Monday as questions remained about the terms of the bank-rescue deal and the impact it could have on Spanish debt levels.

Trading was volatile on Tuesday. Wall Street dipped earlier as yields on Spain's 10-year bond hit a euro-era high, pointing to stress in the nation's debt markets shortly after the bailout deal.

Investors are also staring down the barrel of upcoming elections in Greece. The weekend ballot is viewed as a major risk that could result in the country leaving the euro zone, but it could also spark a rally if the outcome favors Greece's bailout agreement with international lenders.

"It is nice to see us holding above 1,300 (on the S&P), which is an important number psychologically, but it is very possible that we see another disappointing sell-off like yesterday," said Nicholas Colas, chief market strategist at the ConvergEx Group in New York,

In company news on Tuesday, Nasdaq halted short-sales of Zynga Inc as shares of the social gaming company plummeted on increased concerns that the craze for games on Facebook has already peaked.

Volatility around the close of European markets is expected to persist until more clarity is received on the makeup of Greece's government and the stability of Spain's banking system.


Категория: Assets, News