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Markets ended in the green for the fourth consecutive day after Greece’s Prime Minister won a confidence vote which may help the nation avoid a sovereign debt default. While the technology and energy sectors chipped in to bolster the benchmarks, a smaller-than-expected decline in existing home sales also contributed to the upside movement.
The Dow Jones Industrial Average (DJIA) was up 0.9% and settled at 12,190.01. The Standard & Poor 500 (S&P 500) closed at 1295.52, after inching 1.3% higher. The Nasdaq Composite Index gained 2.2% to finish at 2,687.26. The fear-gauge CBOE Volatility Index (VIX) slipped 10% to settle near 18. On the New York Stock Exchange (NYSE), consolidated volumes were 3.6 billion shares and for every one stock that declined, six stocks advanced. After shedding their six-week losing streak, markets have been in positive territory until now for the week. The Dow, S&P 500 and the Nasdaq have moved up by1.5%, 1.9% and 2.7%, respectively.
Markets had been dampened significantly last week after violence spread in Greece over agitation surrounding the country’s debt worries. As promised earlier, Prime Minister George Papandreou reshuffled his cabinet and appointed a new finance minister to ease tensions within the government itself. These worries now seem to be subsiding as Prime Minister George Papandreou has won a confidence vote in Parliament that will help Greece overcome its first hurdle in its attempt to avoid a sovereign debt default.
Late on Tuesday, the Greek Parliament voted in favor of a bill that approved $40.2 billion worth of budget cuts. These cuts will enable Greece to receive the first installment of the loan from the euro-zone countries and International Monetary Fund (IMF). Earlier this week, euro-zone finance ministers stated that they expect Greece to adopt harsher austerity measures in order to receive a higher bailout package.
On the domestic front, a smaller-than-expected drop in existing home sales helped the markets to some extent. According to the National Association of Realtors, existing home sales shed 3.8% in May to an annualized rate of 4.81 million. This was lower than the 5 million posted in April, but was better than economists’ projection of 4.79 million.
The exchange-traded fund that tracks the homebuilder sector, SPDR S&P Homebuilders (XHB), moved up 1.9%. Among the advancers in the sector were Toll Brothers Inc. (NYSE:(TOL - Snapshot Report), Lennar Corp. (NYSE:(LEN - Analyst Report), PulteGroup, Inc. (NYSE:(PHM - Analyst Report), DR Horton Inc. (NYSE:(DHI - Analyst Report), KB Home (NYSE:(KBH - Analyst Report) and Ryland Group Inc. (NYSE:(RYL - Snapshot Report) and they gained 1.4%, 1.4%, 2.3%, 1.3%, 0.3% and 1.1%, respectively.
Separately, on Tuesday, the Federal Reserve’s policy-setting group met for the two-day policy meeting which will decide on the rate of interest. Experts are of the view that Fed will keep the rates at a record low of 0.25%, and will refrain from announcing another round of quantitative easing. The Federal Open Market Committee is also expected to review its growth expectations for the year.
The technology sector was one of the leading gainers and bolstered the broader markets. Among the gainers in the sector were Microsoft Corporation (NASDAQ:(MSFT - Analyst Report), Oracle Corp. (NASDAQ:(ORCL - Analyst Report), Google Inc. (NASDAQ:(GOOG - Analyst Report), Yahoo! Inc. (NASDAQ:YHOO), Apple Inc. (NASDAQ:AAPL) and Adobe Systems Inc. (NASDAQ:ADBE) and they were up 1.2%, 2.3%, 1.7%, 2.4%, 3.2% and 3.4%, respectively.
Gains in the energy sector were largely attributable to BP plc (NYSE:(BP - Analyst Report) as it soared 3.7% after Weatherford International Ltd. (NYSE:(WFT - Analyst Report) consented to pay the former $75 million as settlement for the Macondo well blowout and Gulf of Mexico oil spill. Other gainers in the sector included, Western Refining Inc. (NYSE:(WNR - Analyst Report), Sunoco, Inc. (NYSE:SUN), Tesoro Corporation (NYSE:TSO), Holly Corporation (NYSE:HOC), CVR Energy, Inc. (NYSE:CVI) and Frontier Oil Corp. (NYSE:FTO) and they gained 4.3%, 2.8%, 4.2%, 3.4%, 3.2% and 3.3%, respectively.
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