Wall Street Up As Greek Deal Seen Near
Stocks rose on Thursday as Greece moved closer to concluding a bond swap with private creditors that is needed to stave off a messy default.
The S&P continued to claw back after a string of losses sent the index more than 2 percent lower in three sessions. It is still down 0.7 percent this week.
Athens was on track to secure the deal with its bond holders as part of a financial bailout that has been at the center of investor concerns globally. Missing a repayment would potentially destabilize the euro zone's financial system, cripple the euro and take down commodity and equity markets.
"There is optimism about the Greek debt swap," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.
"The market was also oversold in the short term so from a technical perspective a bounce was to be expected."
Investors holding at least 61 percent of the more than 200 billion euros in Greek debt have already signed up ahead of the 3 p.m. EST (2000 GMT) deadline. This means Greece has crossed the minimum 50 percent threshold required for a deal and was almost certain to top the two-thirds level needed to enforce losses on any holdouts.
Basic materials stocks .GSPM, up 1.5 percent, led the advance on the S&P 500, with the financial sector held back by insurers after the Treasury sold $6 billion of its shares in AIG.
The Dow Jones industrial average .DJI added 46.58 points, or 0.36 percent, to 12,883.91. The S&P 500 Index .INX gained 9.59 points, or 0.71 percent, to 1,362.22. The Nasdaq Composite .IXIC rose 24.10 points, or 0.82 percent, to 2,959.79.
An unexpected rise in new U.S. claims for unemployment benefits in the latest week was not enough to change perceptions the labor market was strengthening, a key factor in the current stocks rally. The data came ahead of the closely watched payrolls report expected Friday.
Shares of American International Group Inc (AIG.N) fell 3 percent to $28.56 after the U.S. Treasury priced its $6 billion AIG offering at $29 a share, allowing the Obama administration to break even on its investment in the insurer as it winds down bailout programs from the financial crisis.
The S&P financial sector .GSPF gained 0.5 percent while the KBW insurance index .KIX was up 0.3 percent.
McDonald's Corp (MCD.N) fell 3.3 percent to $96.86 after the hamburger chain reported a smaller-than-expected rise in February sales, weighed down by weakness in Europe and Asia-Pacific, the Middle East and Africa.
Brazil cut rates more than expected on Wednesday, stepping up a battle to revive struggling industries that threaten to derail a recovery in Latin America's largest economy.
Brazil's meager 2.7 percent gross domestic product expansion last year, reported earlier this week, worried investors as emerging markets are expected to be the main engine of global growth.
REUTERS