Market Wrap: Stocks Up on Greece Optimism; New Nasdaq Record
NEW YORK -- U.S. stocks ended higher Monday, with the Nasdaq closing at a record as hopes grew that a deal would be reached to prevent Greece from defaulting on loans.
Equities have been largely driven by the situation in Greece of late, with investors concerned that if the country defaults on its loans, it may have to leave the euro or the European Union, potentially shaking the region's economic foundations.
%VIRTUAL-pullquote-This takes one anxiety off the table, even if it doesn't yet resolve the primary issues that made investors anxious in the first place.%Athens presented new reform proposals which were cautiously welcomed by eurozone finance on Monday, though the Eurogroup said the proposals required detailed study and that it would take several days to determine whether they can lead to an agreement. Greece needs fresh funds to avoid defaulting on a $1.8 billion debt repayment to the International Monetary Fund on June 30.
"This takes one anxiety off the table, even if it doesn't yet resolve the primary issues that made investors anxious in the first place," said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio.
Sentiment was also lifted by merger and acquisition activity. The S&P energy index rose 1 percent as the top-performing sector of the day after Energy Transfer Equity confirmed it had made a $48 billion unsolicited bid for Williams Cos. (WMB), hours after Williams rejected the offer as significantly too low.
Shares of Williams surged 26 percent to $60.90 and were the biggest percentage gainer on the S&P 500 by far.
Separately, Cigna (CI) rose 4.8 percent to $162.65 after the health insurer rebuffed Anthem's $47 billion merger proposal Sunday. Anthem (ATHM) rose 3.6 percent to $171.04.
Home Sales Rise
Homebuilders rose as existing home sales grew more than expected in May, surging to their highest in five- and-a-half years. The PHLX Housing index rose 0.9 percent while Lennar (LEN) added 1.7 percent to $49.49.
Martha Stewart Living Omnimedia (MSO) slumped 12.5 percent to $6.11 on heavy volume after Sequential Brands (SQBG) agreed to buy the company in a deal that values it at about $353 million, or $6.15 a share. Martha Stewart shares had risen about 37 percent over two days after news of the deal emerged.
The Dow Jones industrial average (^DJI) rose 104.53 points, or 0.6 percent, to 18,120.48, the Standard & Poor's 500 index (^GSPC) gained 13 points, or 0.6 percent, to 2,122.99 and the Nasdaq composite (^IXIC) added 36.97 points, or 0.7 percent, to 5,153.97.
With the day's gains, the Nasdaq ended at a record while the S&P closed 0.3 percent away from its own record close. Currently, the S&P trades at 17.3 times earnings, according to Thomson Reuters (TRI) data, above its long-term average.
"Valuations are somewhat high, but there aren't many alternatives that look attractive," said McCain. "Stocks will probably get a lot higher before there's any serious risk of a pullback on valuation."
Advancing issues outnumbered declining ones on the NYSE by 1,830 to 1,238, for a 1.48-to-1 ratio on the upside; on the Nasdaq, 1,819 issues rose and 988 fell for a 1.84-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 51 new 52-week highs and 1 new lows; the Nasdaq composite was recording 207 new highs and 26 new lows.
About 5.31 billion shares traded on all U.S. platforms, according to BATS exchange data, compared with the month-to-date average of 6.17 billion.
What to watch Tuesday:
- Carnival Corp. (CCL), Darden Restaurants (DRI) and BlackBerry (BBRY) release quarterly financial results before U.S. stock markets open.
- The Commerce Department releases durable goods for May at 8:30 a.m. Eastern time.
- The Commerce Department releases new home sales for May at 10 a.m.