Wall Street rises in relief over European debt auctions
By Chuck Mikolajczak
NEW YORK (Reuters) – Stocks advanced on Tuesday as multinationals climbed in sync with the euro after a number of successful European debt auctions eased investor concerns about the continent’s solvency crisis.
Industrial and technology sectors, which have a large exposure to Europe, led the U.S. market’s advance. Aircraft manufacturer Boeing Co (BA.N: Quote, Profile, Research, Stock Buzz) shot up 3.3 percent to $66.93, while heavy equipment maker Caterpillar Inc (CAT.N: Quote, Profile, Research, Stock Buzz) added 3 percent to $62.84.
The euro, used as a barometer to assess risk appetite, rose above $1.23 versus the dollar to its best level since June 3, even after a survey showed German investor sentiment fell more than expected.
“Euro equals market, market equals euro — one or the other,” said Stephen Massocca, a managing director of Wedbush Morgan in San Francisco.
“If people feel like it’s OK to wade back into the risk pool here, then you need Europe to be OK for that to happen. And if Europe is OK, then the euro should probably go up.”
The Dow Jones industrial average .DJI gained 126.82 points, or 1.24 percent, to 10,317.71. The Standard & Poor’s 500 Index .SPX rose 14.32 points, or 1.31 percent, to 1,103.95. The Nasdaq Composite Index .IXIC climbed 39.99 points, or 1.78 percent, to 2,283.95.
Spain, Belgium and Ireland sold government debt at auctions that attracted healthy demand, which soothed investor worries about the euro zone’s debt crisis.
Semiconductor stocks also helped boost the tech sector and lift the Nasdaq after TSMC (2330.TW: Quote, Profile, Research, Stock Buzz) and UMC (2303.TW: Quote, Profile, Research, Stock Buzz), the world’s two largest contract chip makers, forecast chip demand growing in the coming months amid an improving global economy and rising sales of new PCs and other consumer gadgets.
The Philadelphia semiconductor index surged 3.9 percent.
Intel Corp (INTC.O: Quote, Profile, Research, Stock Buzz), the world’s dominant chip maker, gained 2.1 percent to $21.33. Broadcom Corp (BRCM.O: Quote, Profile, Research, Stock Buzz) climbed 3.9 percent to $35.22 while Marvell Technology Group (MRVL.O: Quote, Profile, Research, Stock Buzz) surged 6.2 percent to $18.58.
An S&P index of energy companies’ stocks gained 2 percent, with the U.S.-listed shares of BP plc (BP.N: Quote, Profile, Research, Stock Buzz) up 2.8 percent at $31.54.
BP America President Lamar McKay said on Tuesday the company soon will have six ships to remove oil siphoned from its ruptured undersea well in the Gulf of Mexico.
The market’s positive tone was enhanced by U.S. data showing inflation remained in check.
New York state manufacturing continued to grow in June although employment fell sharply, while in a separate report, U.S. import prices posted their largest drop in nearly a year in May, buttressing views that inflation is tame and interest rates are likely to stay low.
Airline stocks also climbed after Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) and American Airlines parent AMR Corp (AMR.N: Quote, Profile, Research, Stock Buzz) said second-quarter unit revenue would rise, aided by the improving economy and recovering business traffic.
Delta added 2.2 percent to $13.99 while AMR Corp advanced 2.8 percent to $8.69. The NYSE Arca Airline Index .XAL jumped 3.8 percent.
On the downside, U.S. electronics retailer Best Buy Co (BBY.N: Quote, Profile, Research, Stock Buzz) dropped 6.5 percent to $38.37 after its quarterly profits missed estimates.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)