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The Dow hit the 13, 000 mark thanks to optimism over the Greek bailout deal, but markets finally receded to end mostly flat. Euro-zone finance ministers approved $172 billion worth of financial aid and that sparked the morning rally. However, as the news became a bit old and higher gasoline prices took a toll on sentiments, the benchmarks lost most of its earlier gains.
The Dow Jones Industrial Average ended the day at 12,965.69, after gaining a mere 0.1%. The Standard & Poor 500 (S&P 500) closed yesterday’s trading session mostly unchanged at 1,362.21, which is just a 0.1% improvement from the prior trading day. The tech-laden Nasdaq Composite Index closed in the red, losing 0.1% to finish at 2,948.57.The fear-gauge CBOE Volatility Index (VIX) gained 2.3% to settle at 18.19. Consolidated volumes on the New York Stock Exchange, NYSE Amex and Nasdaq were 6.7 billion shares, somewhat lower than the daily average of 7 billion. Decliners were marginally ahead of the advancers on the NYSE, as for 49% of the stocks that declined, 48% of the stocks moved up. The remaining stocks were left unchanged.
Investors had hoped for Dow would cross the 13, 000 mark and it did not disappoint. The benchmark had been moving closer to this pre-recessionary level over the last couple of days. However, the blue-chip index could not remain above this level for long. Two hours into the day’s trading session, the Dow broke the 13, 000 mark, but it survived at those levels for only 30 seconds. Later during noon and at 1:30 P.M., the Dow scaled similar heights, but it could never sustain the level.
The big news for the day was euro-zone finance ministers granting Greece much-needed bailout funds. The $172 billion worth of financial aid came in after weeks of doldrums. The country’s ministers finalized steps to reduce Greece's debt to 120.5% of its gross domestic product by 2020 after a meeting lasting for 13 long hours. Following the decision on the bailout fund, Greece will not have to default on its debt or make an exit from euro. This will also save Europe and even the global economy from a significantly chaotic situation.
While this development pushed the benchmarks higher, most of the gains were lost during the closing session. Since late last week, investors were hopeful about Greece securing the bailout money, and thus the optimism to an extent was already rather high. Thus, expectations had already pushed the benchmarks higher, and the final event could only spark off a momentary rally.
Separately, new highs in oil prices also dampened sentiment, and benchmarks lost some of their impetus owing to this development. Higher oil prices cannot be good for an economy. Among many adverse impacts, higher fuel charges pushed up transportation costs, leading to increased food and raw material prices, eventually making a dent in the consumer’s pocket. Worries over oil supply from Iran powered the US crude futures to a nine-month high. Prices gained 2.5% to reach $10.584 per barrel.
Meanwhile, the Energy SPDR Select Sector Fund (XLE) moved up 0.7%. Stocks including Exxon Mobil Corporation (NYSE:XOM), Chevron Corporation (NYSE:CVX), Schlumberger (NYSE:SLB), ConocoPhillips (NYSE:COP), Halliburton Company (NYSE:HAL) and National Oilwell Varco, Inc. (NYSE:NOV) jumped 1.1%, 1.6%, 1.1%, 0.6%, 2.0% and 0.9%, respectively.
Almost in tune with the broader markets, the rally in the financial sector also faded during the final hours. The financial sector ended marginally lower with the Financial SPDR Select Sector Fund (XLF) losing 0.1%. As for the individual stocks, JP Morgan Chase & Co. (NYSE:JPM), Visa Inc. (NYSE:V), Hartford Financial Services (NYSE:HIG) and Zions Bancorporation (NASDAQ:ZION) lost 0.03%, 0.7%, 3.2% and 1.8%, respectively.
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