Bloomberg News

U.S. Stocks Rise Amid Greek Bailout Expectations as Nike Jumps

June 28, 2011

June 28 (Bloomberg) -- U.S. stocks rose, sending the Standard & Poor’s 500 Index toward the highest closing level since June 3, amid optimism European nations will take action to prevent a Greek default and after Nike Inc. beat estimates.

Nike rallied 9 percent as higher North American sales helped the world’s largest sporting-goods company top earnings projections. Energy stocks in the S&P 500 surged 2.7 percent, the biggest gain among 10 group and the most since March 21, as oil rebounded from a four-month low amid forecasts that U.S. fuel demand will rise before the July 4 holiday. Accenture Plc rose 3.8 percent after winning inclusion in the S&P 500.

The S&P 500 advanced 1.2 percent to 1,294.92 at 3:14 p.m. in New York, extending its two-day gain to 2.1 percent. The Dow Jones Industrial Average gained 132.64 points, or 1.1 percent, to 12,176.20. About 4.61 billion shares changed hands on U.S. exchanges, 11 percent less than at the same time a week ago.

“Greece is in for a tough road, but I don’t think it’s going to have the systemic contagion that many are concerned about,” said Dan Veru, chief investment officer at Fort Lee, New Jersey-based Palisade Capital Management LLC, which oversees $3.8 billion. In addition to that, “Nike had strong earnings,” he said. “U.S. companies are doing very well, the business environment remains strong.”

Energy, consumer discretionary and raw materials posted the biggest gains today among 10 industries in the S&P 500 as investors drove up companies most-tied to the economy. Since the index bottomed on March 16, defensive industries such as health- care, telecommunications and utilities have risen the most as investors sought havens amid speculation growth is slowing.

German Banks

Global stocks rallied today as two people with knowledge of the matter told Bloomberg News that Germany’s biggest banks and insurers will meet with the Finance Ministry in Berlin tomorrow as they seek to reach an agreement on their contribution to a Greek aid package.

German and French lenders are the biggest European holders of Greek debt and their participation in the plan is key to the European Union goal of getting banks to roll over at least 30 billion euros ($43 billion) of bonds. The debt swap is part of a broader aid package European Union leaders have pledged to pass next month to prevent the euro-region’s first default a year after the Greek bailout that failed to stop the debt crisis.

“The Germans and the French are the key players,” said Mike Shea, a managing partner and trader at Direct Access Partners LLC in New York. “The market is looking for some kind of clarity. Nobody expects a permanent solution right now, but if the German banks are on board with the French plan it indicates that we are closer to some kind of resolution.”

Nike, Energy Stocks

Nike jumped 9 percent to $88.94. Chief Executive Officer Mark Parker has boosted sales and reduced marketing costs from a year earlier, when Nike promoted around the World Cup, to fight rising costs for cotton, labor and transportation that have reduced profitability in the apparel industry this year.

An index of energy shares in the S&P 500 rose 2.7 percent, the most among 10 groups. Schlumberger Ltd., the world’s largest oilfield-services provider, gained 4.3 percent to $84.11. Halliburton Co. advanced 5.7 percent to $48.85.

Accenture increased 3.8 percent to $59.97. The company will replace Marshall & Ilsley Corp. in the S&P 500 after the close of trading on July 5, S&P said in a statement. The change is being made because Bank of Montreal is acquiring Marshall & Ilsley in a deal expected to be completed around that date.

LinkedIn, Technical Analysis

LinkedIn Corp. soared 11 percent to $84.46. JPMorgan Chase & Co. predicted that the shares would climb to $85 in the next 18 months, giving them an “overweight” rating, while Bank of America Corp. has a “buy” recommendation and an estimate of $92. UBS AG, which also assigned a “buy” rating, expects the stock to increase to $90. Morgan Stanley projected $88, with an “overweight” rating.

The S&P 500 may extend its gains from a three-month low to as much as 4.1 percent after a trend measure sent out its first buy signal since April, according to Piper Jaffray Cos.

The Moving Average Convergence/Divergence line, calculated by subtracting the S&P 500’s average level during the past 26 days from the average over the past 12 days, crossed last week above the “signal line” that plots the 9-day average difference between the two. That suggests the gain is likely to continue and help drive the S&P 500 to its 50-day moving average, or 1,317, said Craig W. Johnson, a technical market strategist with Piper Jaffray in Minneapolis.

“People know the summer doldrums probably won’t carry through into the fall,” he said in an interview. “They’re trying to use pullbacks toward the 200-day average as the opportunity buying stocks.”

Stocks in the U.S. rose even after data showed home prices fell by the most in 17 months and confidence among American consumers unexpectedly fell to a seven-month low. The S&P/Case- Shiller index of property values in 20 cities fell 4 percent from April 2010, the biggest drop since November 2009. The Conference Board’s index decreased to 58.5 from a revised 61.7 reading in May that was higher than previously estimated.

--With assistance from Lu Wang and Nikolaj Gammeltoft in New York. Editors: Joanna Ossinger, Nick Baker

To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Cecile Vannucci in New York at cvannucci1@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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