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Stocks Gain Amid Thin Trading; Banks Slip

JeeYeon Park
Monday, 20 Jun 2011 | 2:45 PM ET

Stocks were higher amid thin trading Monday, led by materials, as fears over Greece's debt crisis started to subside and investors snapped up beaten-down stocks.

The Dow Jones Industrial Average climbed above the psychologically-important 12,000-mark after snapping a six-week losing streakon Friday amid thin, choppy trading.

DuPont and Caterpillar led the blue-chip gainers.

The S&P 500 and the tech-heavy Nasdaq turned higher. The Dow and S&P are on track for a three-day winning steak. The CBOE Volatility Index, widely considered the best gauge of fear in the market, tumbled near 20.

Despite the day's rally, however, stocks are on pace for the first losing quarter since the second quarter of 2010.

Among the key S&P sectors, consumer staples and industrials were the top gainers.

With no notable economic news Monday, “we’re watching the Greek play today,” said Brian Battle, vice president of trading at Performance Trust Capital Partners. “The headline is that the political will of the European union is finally meeting economic reality.”

"The approval of the Greek parliament is absolutely essential and it will have to arrive in a timely fashion so we can take a decision on July 3,'' said Jean-Claude Juncker, head of the EU finance ministers.

Euro zone finance ministers postponed a decision on extending 12 billion euros($17 billion) in emergency loans to Greece, saying Athens would first have to introduce harsh austerity measures.

The ministers said they expected the money, the next tranche in a 110 billion euro bailout of Greece by the EU and the IMF, to be paid by mid-July. Greece has said it needs the loans by then to avoid defaulting on its debt.

Meanwhile, Moody's placed ratings of Italian Government-related issuers on review for a possible downgrade. The news comes after the firm said Friday it could downgrade Italy's rating.

The euro traded flat against a basket of currencies. Meanwhile, gold gained near $1,540 an ounce.

Making Money in Metals
The trade on metals, with Marshall Berol, Encompass Fund and Jamie Cox, Harris Financial Group.

Major financials were trading lower after Citigroup cut its price targetson Bank of America , Goldman Sachs and Morgan Stanley . Citi said tough regulatory environments and a dip in commodity trading volumes could hurt earnings for some of the largest banks.

Meanwhile, KBW raised its price target on Discover Financial to $30 from $26.

PNC Financial has reportedly agreed to buy the Royal Bank of Canada’s retail operations for $3.45 billion.

Research In Motion continued to tumble after Bernstein cut its rating on the BlackBerry maker to "underperform" from "market perform." (Watch: RIM—A Takeover Target?) Rival Nokia also declined.

Apple slipped for a third day, trading below its 200-day moving average.

"Apple is still one of the cheapest growth stocks that we have," said trader Stephen Weiss. "[However,] don’t catch a falling knife...wait for it to bottom.”

Meanwhile, health care stocks were mostly higher, helped by gains in the insurers. UnitedHealth , Aetna and Humana were all up more than 3 percent each.

Jim Albaugh, President and CEO of Boeing Commercial Airplanes told CNBC Boeing is evaluating options for its 777 range of airplanes, considering whether to upgrade the 777 or build a completely new model.

Wal-Mart gained after the Supreme Court ruled for the retail giantin the largest sex-discrimination lawsuit in history.

General Electric reached a tentative four-year agreement with trade unions over job packages.

Ford is spending $1 billion to develop a new generation of vehicles for its struggling Lincoln brand, the Wall Street Journal reported.

Oil prices were mixed, but drillers such as Transocean and Nabors were trading lower. Nabors also warned that its pressure pumping and international businesses have been weaker than it expected. U.S. light, sweet crude gained 25 cents to settle at $93.26 a barrel, while London Brent crude fell $1.52 to settle at $111.69.

Meanwhile, Goldman Sachs upgraded a handful of coal stocks, citing rising oil prices. The brokerage upgraded Patriot Coal to "conviction buy" from "neutral," Peabody Energy to "buy" from "neutral" and Consol Energy to "neutral" from "sell."

And the Dow Transport indexrallied more than 1 percent as lower oil will eventually translate into cheaper gasoline prices.

Harbin Electric skyrocketed more than 60 percent after the Chinese electric motor maker agreed to be taken private in a deal that values the firm at $750 million.

Meanwhile, Dangdang jumped after co-founder Peggy Yu Yu told CNBC that the Chinese e-commerce firm is seeing "very fast growth."

Investors will be focusing on the Federal Reserve's policy statement, due Wednesday, and will also closely monitor Bernanke's news conference shortly after the announcement. The Fed is expected to restate its commitment to hold interest rates near zero for an extended period amid fresh signs the U.S. recovery has lost momentum. (Read: How to Trade the FOMC Meeting)

European shares fellas a delay on further loans for Greece intensified worries about the euro zone debt crisis.

Coming Up This Week:

TUESDAY: Existing home sales, FOMC meeting begins; Earnings from Walgreens, Barnes & Noble, Adobe
WEDNESDAY: Weekly mortgage apps, oil inventories, FOMC meeting announcement; Earnings from FedEx, Bed Bath & Beyond
THURSDAY: Weekly jobless claims, new home sales, money supply, Yahoo shareholders meeting; Earnings from ConAgra, Discover Financial, Oracle
FRIDAY: Durable goods, GDP, corporate profits

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DJIA
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S&P 500
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AET
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BAC
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BTU
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CAT
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CNX
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NASDAQ
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DANG
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DD
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DFS
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F
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GE
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GS
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HUM
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MS
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AMNB
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NOK
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PAYX
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PNC
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RIG
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BB
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UNH
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VIX
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WMT
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AAPL
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BA
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