New York: The Dow and S&P 500 rose on Monday on optimism euro zone officials would develop plans to slash Greece’s debt and shore up European banks, but tech stocks fell on a report Apple Inc was cutting back on some key orders.
Speculation about progress in solving Europe’s debt problems boosted growth-sensitive sectors like banks.
Talk of plans for a 50% write-down in Greek debt and improvements in the euro zone rescue fund buoyed the market, although European officials called the talk premature.
“Europe hasn’t taken appropriate steps to deal with its issues so far, so to the extent that the rumblings we’ve been hearing are right, that’s a step in the right direction,” said Mark Foster, who helps manage $500 million at Kirr Marbach & Co in Columbus, Indiana.
Financials were among the session’s best performers, with the KBW bank index up 1.4%. Dow component JPMorgan Chase & Co advanced 2.4% to $30.30 while Citigroup Inc gained 2.6% to $25.64.
Markets have been highly sensitive to European efforts to cauterize its credit crisis that has Greece teetering near a default. Last week, the Dow suffered its worst weekly loss since the depths of the financial crisis in October 2008 while the S&P shed 6.6% for the week.
“There’s so much uncertainty with Europe that every day we move with how the sentiment of the day is blowing,” Foster said. “These confidence issues make it hard to move forward and will result in more volatility ahead.”
The Dow Jones industrial average was up 93.85 points, or 0.87%, at 10,865.33. The Standard & Poor’s 500 Index was up 3.40 points, or 0.30%, at 1,139.83. The Nasdaq Composite Index was down 22.66 points, or 0.91%, at 2,460.57.
Apple was one of the biggest drags on the Nasdaq, falling 2.1% to $395.73 after an analyst said the iPhone maker was cutting orders from suppliers of parts for its iPad tablet.
“If things slow down on the tablet side, that means that perhaps Apple isn’t immune from the economic slowdown after all,” Foster said.
On the upside, Boeing Co provided a major lift to the Dow a day after the manufacturer delivered its long-awaited Dreamliner jet to its first airline customer. The stock rose 3% to $61.57.
Warren Buffett’s conglomerate, Berkshire Hathaway Inc, will launch a share buyback program, an unprecedented move from Buffett that comes after months of investor complaints that the stock was undervalued.
Shares of the more actively traded Class B stock climbed 6.9% to $70.94.
In economic news, sales of new single-family home sales fell in August to a six-month low, underscoring the inability of housing to provide support for the flagging economy.
Technical problems stalled the opening of the Dow Jones Industrial Average for more than 10 minutes. As a result, the Dow did not accurately reflect its components’ stock prices.
The index provider cited “technical difficulties in the real-time calculation system” between the open at 9:30 am and 9:42 am, a DJ Indexes spokesperson said. The 30-stock average showed a flat open while most of its components traded higher. After the problem was fixed, the DJIA rose more than 1%.
The glitch affected the Dow Jones industrial average, the transportation average, the utility average and the composite average, Dow Jones Indexes said.