WASHINGTON, July 1, 2013 – Wall Street greeted investors with a delightful surprise this morning, the first day of July and the beginning of the 3rd investment quarter. Stocks rose in early trading on, led by gains in health care and financial companies. U.S. markets seemed to be taking a cue from other exchanges around the world, building on last week’s welcome but low-volume recovery from June lows.
Japan’s Nikkei 225 rose 1.3 percent, boosted by signs of improvement in Japan’s economy. In Europe, stock indexes rose after a mixed set of economic indicators for the region. While unemployment in the 17 countries that use the euro rose to another record high in May, a separate report showed an improvement in manufacturing in Britain, France and Italy and stabilization in Spain.
The Dow Jones gained 156 points, or 1 percent, to 15,065 as of 10:02 a.m. Eastern Daylight Time. The Standard & Poor’s 500 index rose 18 points, or 1.1 percent, to 1,624. Bank stocks were high over all, with the widely traded banking ETFs KRE (regional banks) and KBE (major banks) getting substantial boosts.
Things seem brighter in markets after a nasty June swoon. The S&P 500 index logged its first monthly decline since October last month after investors were unsettled by comments from Federal Reserve Chairman Ben Bernanke. Bernanke said in late May that the Fed planned to ease back on its stimulus this year and end it next year, providing the economy continues to recover. After his statement and Wall Street’s violent downside reaction, the Fed has spent much of the last several trading days walking back negative market perceptions.
The yield on the 10-year Treasury note climbed to 2.51 percent from 2.49 percent Friday. The note’s yield surged to 2.66 percent last Monday as investors worried that the Fed was poised to ease back on its bond purchases. The yield on the 10-year Treasury note is used to set interest rates on many kinds of loans including home mortgages.
The Fed is currently buying $85 billion of bonds a month to keep interest rates low and help encourage borrowing and spending. That stimulus has been a major factor supporting a rally in stocks this year. Despite last month’s loss, the S&P 500 is still up 13.7 percent this year.
In commodities trading, the price of oil climbed $1.28, or 1.3 percent, to $97.83 a barrel. Gold rose $15.20, or 1.2 percent, to $1,238 an ounce. It’s too early to say whether this is a trend reversal or even a temporary pause in gold’s nearly yearlong decline, so investors in the yellow metal would still be wise to hold off on commitments.
In currency trading, the dollar edged lower against the euro and rose against the Japanese yen and weakened a bit against the Euro as well.
No recommendations today or likely this week. Likely low trading volume will make any market moves, good or bad, highly suspect, so it’s best to hold back, for the most part at least, until post-holiday, July 8.
SPECIAL HOLIDAY NOTICE: It’s important to note that trading this week is likely to be extremely light, volume-wise, due to the Independence Day holiday which falls on Thursday this year. The New York Stock Exchange will close at 1 p.m. on Wednesday and reopen on Friday. But even Friday is likely to be a light trading day.
Given the shortened trading week and our own commitments as well, the Maven won’t be publishing columns from Wednesday, July 3 through Sunday, July 7, although we typically don’t run columns over weekends anyway since Wall Street is closed on Saturdays and Sundays throughout the year. We plan to resume the column on Monday, July 8.
–AP contributed to this report
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any article under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
Read more of Terry’s news and reviews at Curtain Up! in the Entertain Us neighborhood of the Washington Times Communities. For Terry’s investing and political insights, visit his Communities columns, The Prudent Man and Morning Market Maven, in Business.
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