US stocks rise on optimism that Greek debt deal will be done
NEW YORK (AP) — U.S. stocks are moving higher on speculation that Greece will be able to forge a deal with creditors this weekend to secure its future in the euro. Investors were also encouraged by a second day of gains in China’s stock market, suggesting that the government has managed to stem a market rout.
KEEPING SCORE: The Standard & Poor’s 500 index rose 27 points, or 1.3 percent, to 2,078 as of 3:34 p.m. Eastern time. The Dow Jones industrial average climbed 224 points, or 1.3 percent, to 17,773. The Nasdaq composite gained 79 points, or 1.6 percent, to 5,002.GREEK BREAKTHROUGH? Greece and its creditors appeared to be narrowing their differences after Athens offered reform proposals in order to secure a third bailout of around 53 billion euros ($59.5 billion). The proposals, which included around 13 billion euros worth of austerity measures, have so far met with a positive response. French President Francois Hollande described them as “credible.” Representatives from the European Commission, European Central Bank and International Monetary Fund are assessing the proposals. If Greece fails to win the support of creditors for a new bailout, the country faces bankruptcy and an exit from the euro. The eurozone’s finance ministers are due to meet on Saturday, and their verdict will go a long way to determining the fate of Greece. EUROPE’S DAY: Germany’s DAX surged 2.9 percent while the CAC-40 in France jumped 3.1 percent. The U.K.’s FTSE 100 index rose 1.4 percent. THE QUOTE: “The markets are moving today, primarily on pricing in a successful Greek deal,” said Jim McDonald, chief investment strategist at Northern Trust. “Secondarily, they are comforted by some stabilization in the Chinese markets.” AIRLINE RALLY: Airline stocks rallied after American Airlines, the nation’s largest carrier, signaled that it was cutting back on its growth plans this year amid signs that average fares are declining. American said Friday that it expects to increase passenger-carrying capacity by 1 percent this year, down from an earlier forecast of 2 percent. American Airlines rose $1.62, or 4.1 percent, to $41.27. Delta Air Lines jumped $1.87, or 4.6 percent, to $42.42. ANOTHER TAKE: “Optimism that Greece and its creditors can come together and reach an agreement has helped stocks push higher,” said Jasper Lawler, market analyst at CMC Markets. “It’s the closest a deal for Greece has been in five months.” YELLEN ON RATES: Federal Reserve Chair Janet Yellen said Friday that the Fed is on track to start raising interest rates later this year but expressed concerns over headwinds that are still holding back the U.S. economy, in particular lingering weakness in the labor market and new potential threats overseas. David Kelly, chief global strategist at JPMorgan Asset Management, said after the speech that he expected the Fed to lift interest rates in September, provided that Greece reaches a deal with its creditors and there were no major financial crises between now and then.
BONDS AND CURRENCIES: Bond prices fell. The yield on the 10-year Treasury note climbed to 2.42 percent from 2.32 percent on Thursday. The euro surged against the dollar, climbing 0.6 percent to $1.1132. The dollar rose 0.7 percent against the Japanese currency, to 122.82 yen.
CHINA SURGE: On Friday, Chinese stocks jumped for a second day following a three-week slide that authorities have managed to reverse after applying increasingly wide-ranging support measures. The Official Xinhua News Agency said more than a third of companies listed on the Shanghai and Shenzhen exchanges surged by the daily limit of 10 percent on Friday. China’s Shanghai Composite Index jumped 4.5 percent. It is still down 24 percent this month.
ENERGY: The price of oil declined slightly and ended the week down 7 percent on concerns about economic growth in Europe and China as well as robust production from U.S. drillers. Benchmark U.S. crude fell 4 cents to close at $52.74 a barrel in New York. It ended last week at $56.93 a barrel. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 12 cents Friday to close at $58.73 a barrel in London.
In other futures trading on the New York Mercantile Exchange:
— Wholesale gasoline fell 2.8 cents to close at $2.017 a gallon.
— Heating oil fell 0.4 cent to close at $1.740 a gallon.
— Natural gas rose 4.4 cents to close at $2.770 per 1,000 cubic feet.
METALS: In metals trading, silver rose 12 cents to $15.47 an ounce. Gold dropped $1.30 to $1,157.90 an ounce. Copper fell 1.3 cents to $2.55 a pound.