Stocks Close Sharply Higher In Reaction To News Of Greek Deal - U.S. Commentary

(RTTNews) - Stocks moved sharply higher in early trading on Monday and continued to perform well throughout the session. With the gains on the day, the major averages closed higher for the third straight session, climbing further off last Wednesday's multi-month lows.

The major averages saw further upside in the final hour of trading, ending the session near their best levels of the day. The Dow jumped 217.27 points or 1.2 percent to 17,977.68, the Nasdaq soared 73.82 points or 1.5 percent to 5,071.51 and the S&P 500 surged up 22.98 points or 1.1 percent to 2,099.60.

The early rally on Wall Street came amid news Greece and its international creditors have finally reached an agreement on a new bailout for the debt-laden country.

After hours of negotiations, Greece and its creditors reached a conditional agreement that consists of several tough austerity measures.

European Council President Donald Tusk said the agreement comes with strict conditions but places Greece on a path of growth and helps regain trust.

"We had only one objective: to reach an agreement." Tusk said in a press conference. "After 17 hours of negotiations, we have finally reached it. One can say that we have 'agreekment.'"

He added, "Leaders have agreed in principle that they are ready to start negotiations on an [European Stability Mechanism] program, which in other words means continued support for Greece."

The news generated considerable positive sentiment, although the intricacies and complexities involved have led to continued skepticism among some analysts.

Jonathan Loynes, Chief European Economist at Capital Economics, said the tentative deal clearly reduces the risk of Greece exiting the eurozone but noted significant hurdles must still be overcome.

"And the negotiations over debt restructuring, which have been put off again, may yet prompt a Grexit," Loynes said.

Nonetheless, the news may allow traders to take a break from scrutinizing the constantly shifting situation in Greece and focus on upcoming U.S. economic reports on retail sales, inflation, and housing.

Federal Reserve Chair Janet Yellen's semi-annual congressional testimony is also likely to attract attention this week along with the release of earnings news from a slew of big-name companies.

Sector News

Steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 3.7 percent. With the gain, the index climbed further off the six-year closing low it set last Wednesday.

Cliffs Natural Resources (CLF), Gerdau (GBB), and AK Steel (AKS) turned in some of the sector's best performances on the day.

Considerable strength was also visible among airline stocks, as reflected by the 2.4 percent gain posted by the NYSE Arca Airline Index. Brazilian airline GOL (GOL) posted a standout gain, jumping by 15.2 percent.

Internet, trucking, software, and retail stocks are also saw significant strength on the day, moving higher along with most of the other major sectors.

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 1.6 percent, while Hong Kong's Hang Seng Index jumped by 1.3 percent.

The major European markets also showed strong moves to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 1 percent, the German DAX Index and the French CAC 40 Index shot up by 1.5 percent and 1.9 percent, respectively.

In the bond market, treasuries showed a lack of direction for much of the session before closing modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.3 basis points to 2.43 percent.

Looking Ahead

U.S. economic data is likely to attract attention on Tuesday, with traders likely to keep a close eye on the Commerce Department's report on retail sales in June. Economists expect sales to rise by 0.3 percent.

On the earnings front, Johnson & Johnson (JNJ), JP Morgan (JPM) and Wells Fargo (WFC) are among the companies due to release their quarterly results before the start of trading on Tuesday.