Stock Market News for June 30, 2009

US stocks started the holiday-shortened trading week on a positive note as energy, technology and industrial shares pulled equity markets higher.  Although stocks seesawed in early trading, a gain in oil prices buoyed sentiments on the Street and investors raced to put money in the stock market. 

The Down Jones industrial average advanced 91 points or 1.1% and the S&P 500 increased 0.9%.  NASDAQ edged up 0.3%.  Volume on the NYSE was light with only 1.07 billion shares exchanging hands and advancing issues outpacing declining stocks by a three-to-two margin.  The measure of market volatility, the CBOE Vix, retreated 2.2% to 25.35%, its lowest level since mid-September.  Treasury prices jumped, with the yield on the benchmark 10-year note declining to 3.48%.  Crude prices jumped to more than $71 per barrel on higher demand expectations and reports that Nigerian militants partly shut down an offshore oil facility.    

Trading is expected to remain volatile this week as some money managers do last minute adjustments to their portfolios, a phenomenon known as “window dressing.”  The week, cut short by the Independence Day holiday, also brings a spate of economic data and is likely to provide a sense of where the markets are headed.  Of key importance is the monthly employment report that is due on Thursday.  There are expectations that unemployment in US rose at a slower pace than projected.   

The jump in crude prices boosted energy stocks, sending shares of Chevron (NYSE:CVX - Analyst Report) up 1.4% and ExxonMobil (NYSE:XOM - Analyst Report) up 2.2%.  A WSJ report that said banking firms are expected to report higher second-quarter profits boosted financials. Moreover, SLM (NYSE:SLM - Analyst Report) shares rallied 8.5% on pricing details of its student loan services contracts, announced yesterday by the Department of Education.

Meanwhile, Apple Inc. (NASDAQ:AAPL - Analyst Report) announced that CEO Steve Jobs has returned to work.  The iPhone maker said Jobs will work at Apple offices “a few days a week” and work from home the other days.  Microsoft (NASDAQ:MSFT - Snapshot Report) rose 2.2% after Deutsche Bank (NYSE:DB - Snapshot Report) raised its price target on the software maker.  General Dynamics (NYSE:GD - Analyst Report) rose 2.8% to $57 and Eastman Chemical (NYSE:EMN - Analyst Report) jumped 3.7% to $38.79. 

Among DJIA components, all but Alcoa (NYSE:AA - Snapshot Report) advanced.  Hewlett-Packard (NYSE:HPQ - Analyst Report) led the gainers with an advance of 3.5%, followed by Bank of America (NYSE:BAC - Analyst Report), which rose 3.5% and Merck (NYSE:MRK - Analyst Report), which added 3.2%.  The $22.4 billion Magellan Fund reported it raised its holdings of Bank of America (NYSE:BAC - Analyst Report) in May. Merck (NYSE:MRK - Analyst Report) rose after reporting it has returned to normalized shipments of its Zostavax shingles vaccine.  However, Alcoa (NYSE:AA - Snapshot Report) declined after analysts at FBR Capital, downgraded the stock to "underperform" from "market perform", citing valuation and oversupply concerns.

All ten S&P500 industry groups recorded gains, with utilities rising 1.3%, oil and gas adding 1.2%, telecom rising 1.2%, and financials advancing 1.1%.  Home builders also rose after Credit Suisse (NYSE:CS - Analyst Report) upgraded KB Homes (NYSE:KBH - Snapshot Report), which had reported signs of moderation in certain negative housing trends. Lennar (NYSE:LEN - Snapshot Report), which reported new home sales and orders picked up during the quarter, jumped 5.8%.  Morgan Stanley (NYSE:MS - Snapshot Report) upgraded JC Penney (NYSE:JCP - Analyst Report) shares to “overweight” from “equal-weight”, noting the company was “the most likely candidate” among department store chains to outperform current margin projections for the second quarter.