US tech stock rally stymied by debt fears
THE Nasdaq advanced yesterday, propelled by a rally in Apple and other big-cap tech stocks, but fears Europe’s debt crisis is in danger of worsening limited broader gains.
Positive analyst comments lifted both eBay, up 4.5 per cent to $42.49, and Groupon, up 10.8 per cent at $11.15. Apple accounted for about half the Nasdaq’s rise, climbing two per cent to $585.78.
The S&P eked out a slight gain as it bumped up against its 50-day moving average around 1,347 while the Dow ended lower.
A weekend election victory by pro-bailout parties in Greece removed one headwind facing the Eurozone. But rising bond yields in Spain and Italy reinforced views that Europe has yet to control its debt crisis.
The election “wasn’t a game changer and does little to alleviate the larger issues that remain in Europe,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
A senior official with Greece’s New Democracy party, the conservatives who won Sunday’s election and who back Athens’ international bailout plan, said Greece would form a government today.
But there were conflicting signals about the way forward. The leader of New Democracy, Antonis Samaras, pledged his commitment to Greece’s international bailout package, but also said there would have to be “some necessary amendments”.
Meanwhile, Germany’s chancellor, Angela Merkel, said any loosening of agreed reform pledges would be unacceptable.
The election results also offered little reprieve from contagion concerns as yields on both Italian and Spanish bonds rose, with Spain’s 10-year yield climbing above the seven per cent mark at which other highly indebted Eurozone nations were forced to seek bailouts.
European authorities have already agreed to a €100bn rescue for Spain’s troubled banks.
Market participants were also reluctant to take bets ahead of the US Federal Reserve’s two-day policy meeting, with investors keen to see if the Fed will announce new stimulative measures in its policy statement at the meeting’s close tomorrow afternoon.
‘Without knowing what will come from the Fed meeting, the market doesn’t want to get ahead of anything,” Luschini said.
The Dow Jones industrial average was down 25.28 points, or 0.20 per cent, at 12,741.89. The Standard & Poor’s 500 Index was up 1.94 points, or 0.14 per cent, at 1,344.78. The Nasdaq Composite Index was up 22.53 points, or 0.78 per cent, at 2,895.33.
Last week, US stocks rallied on Thursday and Friday on news that central banks of major economies would take steps to stabilise markets if necessary after the Greek vote.