New York rises on success of GM IPO
US stocks jumped yesterday on expectations of a resolution of Ireland’s banking crisis, but the S&P 500’s inability to break through resistance suggests stocks could be in a tight range through the end of the year.
General Motors shares gained 3.6 per cent in its return to public trading and accounted for about 5.1 per cent of regular session volume, according to Thomson Reuters data.
However, given how much Ireland’s financial woes hampered stocks in recent days, GM’s success was a side note to the rescue of another troubled European country’s finances.
US-listed shares of the Bank of Ireland climbed 33.3 per cent to $2.88.
Despite the bullish sentiment, the S&P 500 hovered around 1,200 for most of the session but failed to hold above the key level.
This could mean the index’s trading range will remain tight for the rest of the year.
“There’s a lot of selling pressure at the 1,200 level, there’s buying pressure at 1,150 and we’re in a tight range until further notice,” said Joe Battipaglia, market strategist at Stifel Nicolaus in Yardley, Pennsylvania.
Piercing the 1,200 level would leave the S&P 500 facing hefty technical resistance near 1,228, the highest it has been in more than two years.
Reflecting less market uncertainty, the CBOE Volatility index fell 13.8 per cent, its largest percentage daily drop in more than five months.
The Dow Jones industrial average gained 173.35 points, or 1.57 per cent, to 11,181.23.
The Standard & Poor’s 500 rose 18.10 points, or 1.54 per cent, to 1,196.69.
The Nasdaq Composite added 38.39 points, or 1.55 per cent, to 2,514.40.
GM shares shot up as much as 9.06 percent as investors bet the US automaker can make a sustained recovery as it returned to the market after a blockbuster IPO.
The stock closed up 3.6 per cent at $34.19. The S&P Industrials index rose 1.8 percent as GM’s advance boosted shares of other automakers and auto suppliers.
“This morning we had the big push from GM and the enthusiasm that creates,” Battipaglia said.