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Investors finally had something to cheer about yesterday as all the benchmarks ended in the green for the first time in five sessions, spurred by better-than-expected U.S. service sector data. At least for the day, investors were not too bothered by the European crisis while the Group of Seven (G7) finance ministers and central bank governors had a conference call where they discussed the issue. However, they provided no clear indication regarding the matter and lower-than-average volumes suggested investors were wary of betting big bucks.

The Dow Jones Industrial Average (DJI) moved up 0.2% to close at 12,127.95. The Standard & Poor 500 (S&P 500) gained 0.6% and finished yesterday’s trading session at 1,285.50. The Nasdaq Composite Index jumped 0.7% and closed over 18 points higher at 2,778.11. The fear-gauge CBOE Volatility Index (VIX) dropped 5.5% to settle at 24.68. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were 6.05 billion shares, well below the year-to-date daily average of 6.85 billion shares. Advancing stocks dominated the decliners on the NYSE; as for 71% stocks that gained, 25% stocks declined.

For some time now investors’ apprehensions have been growing over the increasing threat that the European crisis poses to the global economy. Greece has struggled to form a government and successfully negotiate its bailout package which will secure its place in the European currency union. While the nation goes to the polls again this month, a survey late last month sparked enough concerns by showing an anti-bailout party would command a large enough majority to form a government if elections were held at that time.

The euro zone is itself beset by many concerns. Economic reports have shown that unemployment in the region touched a record high in April. Further, data released last month noted that Italy, Spain and Portugal’s GDP contracted 0.8%, 0.3% and 0.1%, respectively. However, thanks to the 0.5% growth in Germany’s GDP the euro zone narrowly escaped a recession. The region ultimately recorded ‘zero GDP growth’ in the first quarter. France too had zero GDP growth. Additionally, borrowing costs in nations like Spain and Italy have been on the rise. Such concerns have lingered, denting U.S. benchmarks severely.

However, investors did not have to witness another market slump due to the European crisis yesterday. The G7 meet raised hopes as they "agreed to monitor developments closely". A statement by the U.S. Treasury Department noted that the G7 “reviewed developments in the global economy and financial markets and the policy response under consideration, including the progress toward financial and fiscal union in Europe".

Nonetheless, the gains yesterday were anything but robust on the back of the G7 meet, as the emergency conference ended with no clear decision or indication as to the means to be used to solve the lingering crisis. Separately, Mariano Rajoy, Spain's Prime Minister, urged Europe "to support those that are in difficulty. While rumors did the rounds that Spain was resisting a bailout and Germany was pressing the troubled nation to secure a bailout for its banks, German Chancellor Angela Merkel’s spokesman said: "Everyone knows that Europe is ready (to help)... but the decision lies with the Spanish government alone".

Amidst these cross-Atlantic events, a positive report on the U.S. service sector primarily enabled the markets to accomplish a rare finish in the green. According to The Institute for Supply Management, economic activity had increased in the non-manufacturing sector for the month of May, the 29th consecutive month of growth. According to the report, "The NMI registered 53.7 percent in May, 0.2 percentage point higher than the 53.5 percent registered in April. This indicates continued growth this month at a slightly faster rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 55.6 percent, which is 1 percentage point higher than the 54.6 percent reported in April, reflecting growth for the 34th consecutive month. The New Orders Index increased by 2 percentage points to 55.5 percent, and the Employment Index decreased by 3.4 percentage points to 50.8 percent, indicating continued growth in employment at a slower rate”. The increase in NMI was higher than consensus estimates, which had expected it to post a reading of 52.9%.

Positive data boosted the spirits of investor, who had struggled to come to terms with gloomy jobs data last Friday. Financials and materials registered the highest gains. The Financial Select Sector SPDR (XLF) jumped 1.5% and stocks including Citigroup Inc. (NYSE:C), Bank of America Corp (NYSE:BAC), Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS) gained 3.8%, 2.9%, 1.3%, 3.2% and 4.1%, respectively.

As for the material sectors, the Materials Select Sector SPDR (XLB) gained 0.9%. Among the gainers, Southern Copper Corp (NYSE:SCCO), E I Du Pont De Nemours And Co (NYSE:DD), PPG Industries, Inc. (NYSE:PPG) and Western Refining, Inc. (NYSE:WNR) were up 1.0%, 0.7%, 1.3% and 2.6%, respectively.

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