Reports of a possible resolution to Greece’s debt crisis put the market on track for a finish in the green. Combined with mixed economic reports, this development helped benchmarks end their six-week losing streak. A decline in oil prices lifted the indices higher, but losses for the technology sector limited gains and the tech-heavy Nasdaq ended lower. Analysts also did not rule out a continuing bearish trend in the market.
The Dow Jones Industrial Average (DJIA) moved above the psychological 12,000 level, gaining 0.4% to settle at 12,004.36. The Standard & Poor 500 (S&P 500) increased 0.3% and closed at 1,271.50. However, the tech-laden Nasdaq Composite Index slipped 0.3% to finish the day at 2,616.48. The Dow and the S&P 500 managed to avoid their seventh straight week of losses as the Dow moved up by 52.45 points or 0.4% and the S&P 500 gained just 0.52 points or 0.04% for the week. Conversely, the Nasdaq maintained its downward movement, ending 1% lower for the week. On Friday, consolidated volumes on the New York Stock Exchange (NYSE), Amex and Nasdaq were 8.29 billion shares against the daily average of 7.58 billion. On the NYSE, for every three stocks that gained, two stocks moved down.
The markets had been dented over the past few days by Greek debt worries. Nonetheless, it was the news from the same front that provided some relief to the markets, helping indices finish in positive territory. Talks between France and Germany suggested a possible resolution to the country’s woes through a debt deal. Germany withdrew its demand that bondholders share a major part of the burden in this rescue. She also agreed to help the European Central Bank ensure that the inclusion of private investors in the bailout did not result in a default. Speaking at a joint news conference with French President Nicolas Sarkozy, German Chancellor Angela Merkel said: "We would like to have a participation of private creditors on a voluntary basis." Such participation "should be worked out jointly with the ECB and there shouldn't be any dispute with the ECB on this," she added.
Economic reports came in mixed on Friday, helped to bolster the indices only to an extent. In an encouraging development, The Conference Board reported a 0.8% jump in its leading indicator index for May, ahead of the economists’ consensus of a 0.3% increase. The index also rebounded from a 0.4% decline in April 2011, which was also the first decline since June 2010. The Index of Leading Economic Indicators, calculated by The Conference Board, is used as a barometer of economic activity over a range of three to six months. The index includes leading indicators like average weekly hours, average weekly initial claims and manufacturers’ new orders. Out of the 10 indicators, eight finished higher. The report also stated: “Modest economic growth is being buffeted by some strong headwinds, including high gas and food prices and a soft housing market," adding, “The economy will likely continue to grow through the summer and fall, however it will be choppy.
Separately, The University of Michigan consumer sentiment survey for June declined to 71.8. The report came in weaker than expected as the economists had expected the reading to touch 73.5.
Crude prices fell yet again as light, sweet crude oil for July delivery declined 2% to $93.01 per barrel. This took the energy sector modestly lower and Energy Select Sector SPDR fund was down 0.2%. Among the decliners in the sector were Exxon Mobil Corporation (NYSE:(XOM - Analyst Report), Chevron Corp. (NYSE:(CVX - Analyst Report) and Valero Energy Corp. (NYSE:(VLO - Analyst Report) and all three shed 0.3%. However, the fall in crude prices could not dampen the mood and many energy stocks also finished the day in the green. ConocoPhillips (NYSE:(COP - Analyst Report), BP plc (NYSE:(BP - Analyst Report), Anadarko Petroleum Corporation (NYSE:(APC - Analyst Report) and Murphy Oil Corporation (NYSE:(MUR - Analyst Report) gained 0.4%, 0.9%, 0.7%, and 0.03%, respectively.
The tech sector limited the gains and stocks like Intel Corporation (NASDAQ:(INTC - Analyst Report), Cisco Systems, Inc. (NASDAQ:(CSCO - Analyst Report), Juniper Networks, Inc. (NYSE:(JNPR - Analyst Report), CIENA Corp. (NASDAQ:(CIEN - Analyst Report), NVIDIA Corporation (NASDAQ:(NVDA - Analyst Report), Apple Inc. (NASDAQ:AAPL) and Silicon Graphics International Corp. (NASDAQ:SGI) dipped 1.1%, 0.5%, 0.5%, 3.1%, 2.4%, 1.5% and 5.9%, respectively.