Stocks Close Firmly Positive Amid Optimism About Greece - U.S. Commentary

(RTTNews) - Stocks moved mostly higher over the course of the trading day on Monday, offsetting the pullback seen last Friday. With the upward move on the day, the tech-heavy Nasdaq finished the session at a new record closing high.

The major averages ended the day firmly in positive territory but well off their highs for the session. The Dow climbed 103.83 points or 0.6 percent to 18,119.78, the Nasdaq advanced 36.97 points or 0.7 percent to 5,153.97 and the S&P 500 rose 12.86 points or 0.6 percent to 2,122.85.

The strength on Wall Street largely reflected optimism that Greece will finally reach an agreement with its international creditors.

Greece has reportedly submitted a new proposal that could lead to progress and allow the debt-laden country to avoid a default.

Jonathan Loynes, Chief European Economist at Capital Economics, said, "The optimism stems from new proposals advanced by Greece over the weekend, which reportedly cross the previous 'red lines' of pension cuts and VAT rises."

"In exchange, Greece's creditors have apparently indicated that they are prepared to meet the Greek government's demands for some sort of debt relief to be included in an extension to the current bailout or a third program," he added.

Adding to the optimism, Eurogroup President Jeroen Dijsselbloem described the Greek proposal as a positive step and said an agreement could be reached later this week.

The latest signs of progress come as Greece has indicated that it will be unable to make a 1.5 billion euro payment to the International Monetary Fund at the end of the month without further aid.

Positive sentiment was also generated by a report from the National Association of Realtors showing that existing home sales jumped to their highest level in almost six years in May.

The report said existing home sales surged up by 5.1 percent to an annual rate of 5.35 million in May from an upwardly revised 5.09 million in April.

Economists had expected existing home sales to climb to an annual rate of 5.25 million from the 5.04 million originally reported for the previous month.

Sector News

Airline stocks moved sharply higher over the course of the trading day, driving the NYSE Arca Airline Index up by 2.3 percent. The gain extended a recent upward move by the index, which reached its best closing level in a month.

Avianca Holdings (AVH), JetBlue (JBLU), and American Airlines (AAL) turned in some of the airline sector's best performances on the day.

Considerable strength was also visible among biotechnology stocks, as reflected by the 2.1 percent gain posted by the NYSE Arca Biotechnology Index. With the gain, the index ended the session at a new record closing high.

Brokerage, banking and pharmaceutical stocks also saw significant strength, moving higher along with most of the other major sectors.

Meanwhile, gold stocks bucked the uptrend by the broader markets, dragging the NYSE Arca Gold Bugs Index down by 1.5 percent. The weakness in the sector came as gold for August delivery fell $17.80 to $1,184.10 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index surged up by 1.3 percent, while Hong Kong's Hang Seng Index jumped by 1.2 percent.

The major European markets also moved sharply higher on the day. While the U.K.'s FTSE 100 Index shot up by 1.7 percent, the French CAC 40 Index and the German DAX Index both soared by 3.8 percent.

In the bond market, treasuries pulled back sharply amid the optimism about the situation in Greece. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.3 basis points to 2.36 percent.

Looking Ahead

News regarding the situation in Greece is likely to remain in focus on Tuesday along with the release of reports on durable goods orders and new home sales.