Despite turbulence overseas, the U.S. stocks have been doing very well this week- or at least very well ‘considering’. Stocks opened much higher on Tuesday than expected, and traders are hoping to see this trend continue throughout the week.
Forexpros – U.S. stocks opened higher on Tuesday, supported by optimism linked to Spain’s financial bailout, although concerns over the country’s financial troubles and political uncertainty in Greece continued to weigh on investor confidence.
During early U.S. trade, the Dow Jones Industrial Average rose 0.37%, the S&P 500 index gained 0.32%, while the Nasdaq Composite index added 0.40%.
Investors were cautious as questions remained over the source of Spain’s rescue funds and whether the bailout repayments would add to the country’s already high borrowing costs.
The yield on Spanish 10-year bonds climbed to 6.65% earlier, hovering close to the critical 7% threshold, which is seen as unsustainable in the long term.
Markets were also jittery ahead of Sunday’s general election in Greece, which could decide the course of the country’s future in the euro zone.
In the tech sector, Apple shares rose 0.40% after Canaccord Genuity raised its price target on the company to USD800 from USD775.
The upgrade came a day after Apple’s annual Worldwide Developers Conference largely failed to impress investors, even after the company unveiled its next-generation MacBook Air and MacBook Pro laptops in addition to a new version of its mobile operating system, iOS 6.
Financial stocks were also broadly higher as shares in Bank of America jumped 0.96%, Goldman Sachs climbed 0.72% and Citigroup surged 1.74%.
Goldman Sachs said earlier that it had rehired veteran banker Mark Schwartz in the role of chairman of its Asia Pacific unit, based in Beijing, becoming the first global investment bank to place its sole regional chairman in China’s capital.
JP Moran fell 0.37% however, following reports that a number of its executives and directors had been aware of risky practices by a team of London-based traders two years before botched bets cost the bank over USD2 billion.
Also on the downside, billionaire investor Warren Buffett’s Berkshire Hathaway Inc. saw shares fall 0.37% after offering to buy Residential Capital LLC’s mortgage unit, according to court papers filed Monday.
In addition, NetJets, a private jet-sharing company owned by Berkshire Hathaway, said it would buy up to 425 new business jets from Bombardier Inc. and Cessna in a deal worth USD9.6 billion to expand its North American and European fleet.
Among earnings, shares in Texas Instruments jumped 1.56% after the chipmaker narrowed its second-quarter forecast, saying it expects earnings per share to now fall between 32 cents to 36 cents, from a previous estimate of 30 cents to 38 cents.
Michael Kors soared 7.83% after the designer clothing and handbag maker beat profit expectations and handed in a full-year earnings and revenue forecast that exceeded estimates.
Across the Atlantic, European stock markets were higher. The EURO STOXX 50 climbed 0.51%, France’s CAC 40 added 0.21%, Germany’s DAX advanced 0.64%, while Britain’s FTSE 100 rose 0.32%.
During the Asian trading session, Hong Kong’s Hang Seng Index shed 0.65%, while Japan’s Nikkei 225 Index slumped 1%.
Also Tuesday, official data showed that U.S. import prices fell 1% in May, in line with expectations, following a flat reading the previous month.
Later in the day, the U.S. was to publish a government report on federal budget balance.
The higher than expected U.S. stocks may be a result of the optimism for the bailout package for Spain. This optimistic outlook may be short lived as the countries rocky economy, and Greece’s looming elections may knock the markets back down.
Because of questions that surround the source of Spain’s rescue funds, investors are still uneasy about the situation. They are unsure about the source, and whether the repayment of the bailout will prove to be a higher stress on Spain’s struggling banks. Spain’s 10 year bonds are also getting dangerously close to the 7% mark- a critical number that represents long term failure and unsustainability.
The world’s experts on trading and financial markets are all jittery as they are awaiting the elections in Greece coming up this Sunday. This election could change the terms of Spain’s bailout if anti-bailout politicians are put into office. All of the experts agree that this election could change the course of the country’s future in the euro zone.
Data also shows that the tech markets are up after Apple’s shares rose by .40%. Financial stocks are much higher after stocks in Bank of America, Goldman Sachs, and Citigroup surged.
The data also shows that the price of imports fell 1% in May, which was in line with the projected expectations. April’s data showed no changes whatsoever for imports.
The U.S. is set to publish a government report on the federal budget balance, the results may have a significant impact on the market.
Do you think we’ll be surprised by the report?