New York: US stocks rose on Monday, as the latest development to reduce Greece’s debt helped draw buyers and the S&P 500 touched a key support level, but anemic volume signalled the recent weakness may not be over.
Stocks erased early losses as the S&P 500 dipped toward 1,259.78, its 200-day moving average, which is often viewed as a pivotal point in determining the market’s direction. A drop below that level would be the first since September 2010.
“When you’re in the midst of a bullish trend since July of last year -- that’s when the bottom was -- I think people tend to look for places to buy dips, and this is just an obvious place to expect some buying to come into the market,” said John Kosar, director of research at Asbury Research in Chicago.
The moves higher may have been slightly exaggerated due to thin volume. Just 5.66 billion shares traded on the New York, Nasdaq and NYSE Amex exchanges, compared with a daily average of 7.58 billion.
Euro-zone finance ministers gave Greece two weeks from Monday to approve stricter austerity measures in return for another €12 billion in emergency loans, piling pressure on Athens to get its ragged finances in order.
The euro-zone finance ministers expect the money, the next tranche in a 110-billion-euro bailout of Greece by the European Union and the International Monetary Fund, to be paid by mid-July. Greece needs the loans by then to avoid a debt default.
Despite the development, financials were the S&P 500’s weakest sector. Shares declined after Citigroup cut price targets on a number of banks, including Goldman Sachs, citing a tough regulatory environment. Goldman’s shares slipped 1.5% to $135.14, while Morgan Stanley shares dropped 1.9% to $22.39.
The Dow Jones industrial average climbed 76.02 points, or 0.63%, to end at 12,080.38. The Standard & Poor’s 500 Index rose 6.86 points, or 0.54%, to 1,278.36. The Nasdaq Composite Index gained 13.18 points, or 0.50%, to 2,629.66 at the close.
The S&P 500 is up about 22% since the end of August, but has pulled back in recent weeks amid signs that the US economic recovery is faltering.
The CBOE Volatility Index, known as the VIX, lost 8.5%, its biggest daily%age drop since March 21.
“I think the (economic) soft patch is already priced into the market, but we’re only three or four weeks away from the heart of earnings reporting, and that should be the catalyst that turns the pullback into a correction or ends the pullback,” said Hank Smith, chief investment officer of Haverford Trust Co. in Philadelphia.
Some see the latest downward trend for stocks as intact for now.
“We continue to see the intermediate-term indicators in a negative state, while short-term oversold conditions increase,” said Larry McMillan, president of McMillan Analysis Corp., in Morristown, New Jersey.
The S&P health-care index rose 1% and ranked among the session’s top-performing sectors.
The US Food and Drug Administration approved a tamper-resistant pain drug from Pfizer Inc and Acura Pharmaceuticals Inc. Acura shares jumped 16.3% to $4.50, while shares of Pfizer, a Dow component, rose 0.05% to $20.27.
In the consumer discretionary sector, which was also among the top-performing groups, Wal-Mart Stores Inc gained 0.4% to $53.04. The U.S. Supreme Court ruled for the retail giant in the largest sex-discrimination lawsuit in history, saying class-action status for female employees seeking billions of dollars had been improperly granted.
Advancing stocks outnumbered declining ones on the NYSE by about 2 to 1. On the Nasdaq, advancers beat decliners by about 15 to 11.