Stocks climb after Greece loan agreement curbs default fears; Dow extends move above 11,000

By Tim Paradis, AP
Monday, April 12, 2010

Stocks edge higher after Greece debt concerns ease

NEW YORK — A loan agreement for Greece and a handful of corporate takeover announcements nudged the stock market higher.

The Dow Jones industrial average climbed 20 points Monday to move back above 11,000 and the Standard & Poor’s 500 index neared 1,200.

The loan agreement for Greece allowed U.S. investors to turn their focus to a busy week of economic and corporate earnings reports. Dow component Alcoa Inc. is scheduled to report earnings after the market closes.

European leaders agreed over the weekend to make loans available to Greece to help the country ease its public debt burden. The 16 countries that use the euro agreed to provide $40.5 billion in loans to Greece if needed. The International Monetary Fund could contribute another $13.5 billion.

The loans would carry interest rates below what private lenders had been demanding in recent days to hold Greek debt. Traders had been worried Greece would default on its loans.

The details helped to calm worries that have been one of the few drags on stocks so far this year. There has been concerns in recent months that mounting debt in Greece and other European nations like Spain and Portugal would stunt an economic recovery in Europe and undermine Europe’s shared currency, the euro.

“This is clearly a positive development that the EU is identifying and dealing with what has really been it’s first real challenge,” said Alan Gayle, senior investment strategist for RidgeWorth Investments.

Meanwhile, the latest round of corporate dealmaking signaled that business leaders are more confident about a recovery.

Mirant Corp. agreed to acquire rival power company Reliant Energy Inc. for $1.61 billion, while the private equity firm Cerberus Capital Management is buying DynCorp International, a provider of support services to U.S. national security operations, for $1 billion.

The reports on Greece and the corporate buyouts raised expectations that the economy is recovering. Hopes of a rebound have been driving the stock market higher for 13 months. The advance since February has been more incremental but the gains have still left major stock indexes at their best levels in about 18 months.

In late afternoon trading, the Dow rose 21.16, or 0.2 percent, to 11,018.51. The S&P 500 index rose 3.74, or 0.3 percent, to 1,198.11. It traded has high as 1,199.20. It hasn’t topped 1,200 since September 2008.

The Nasdaq composite index rose 7.36, or 0.3 percent, to 2,461.41.

The Dow is coming off its sixth straight weekly gain. The index climbed above 11,000 for the first time since September 2008 in the final moments of trading Friday before ending just below that threshold.

Bond prices rose Monday after the deal to help Greece reduced concerns that its problems would hurt the world’s debt markets. The rise in prices pushed down yields. The yield on the benchmark 10-year Treasury note fell to 3.84 percent from 3.88 percent late Friday.

Gold rose. Crude oil fell 58 cents to $84.34 per barrel on the New York Mercantile Exchange.

Reports on inflation, retail sales, manufacturing and housing will be released during the week. Intel Corp., JPMorgan Chase & Co., Bank of America Corp., Google Inc. and General Electric Co. all slated to report earnings this week.

Among stocks, Mirant rose $2.05, or 19.1 percent, to $12.78, while RRI rose 57 cents, or 14.4 percent, to $4.52. DynCorp surged $5.69, or 48.4 percent, to $17.44.

Alcoa rose 32 cents, or 2.3 percent, to $14.71.

Three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 645.4illion shares, compared with 669.8 million shares traded at the same point Friday.

The Russell 2000 index of smaller companies rose 2.72, or 0.4 percent, to 705.67.

Britain’s FTSE 100 rose 0.1 percent, Germany’s DAX index rose less than 0.1 percent, and France’s CAC-40 slipped less than 0.1 percent. Japan’s Nikkei stock average rose 0.4 percent.

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