(XLE) Stock Market News for June 24, 2011 – Market News

On Thursday, markets rebounded from session lows as Greece agreed to implement a five-year austerity plan. Markets were dragged lower early in the day after a drop in oil prices. However, news from the domestic front was discouraging with disappointing economic reports on initial claims and home sales.

The Dow Jones Industrial Average (DJIA) declined 0.5% to close at 12,050.00. The Standard & Poor 500 (S&P 500) shed 0.3% to finish at 1,283.50. However, the Nasdaq Composite Index climbed up 0.7% to close at 2,686.75. The fear-gauge CBOE Volatility Index (VIX) traded above 19. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes were 8.31 billion shares, compared with the daily average of 7.57 billion. On the NYSE, 13 stocks moved up for every 17 stocks in the red.

Among the 30 Dow components, nine stocks managed a finish in the green with The Home Depot, Inc. (NYSE:HD), Pfizer Inc. (NYSE:PFE) and Intel Corporation (NASDAQ:INTC) leading the gains as they surged 2.1%, 1.8% and 1.5%, respectively. Though the S&P 500 closed with losses, it was able to gain 20 points after reaching session lows and also bounced back from its 200-day moving average. On the other hand, Nasdaq posted gains for the second-straight day.

Markets had opened with enough fragility as oil prices skidded amid continuing worries after the Federal Reserve’s comments on Wednesday. As we reported earlier, at the end of the Federal Reserve’s policy-setting group’s meeting, the Fed kept its rates at record low levels for an extended period, and provided no indications of another round of quantitative easing. Moreover, the Fed had also stated that the US economy is recovering at a slower pace than expected. Additionally, while the Federal Reserve acknowledged sluggish growth, the committee also warned of higher inflation accompanied by higher unemployment. Speaking on these issues, Federal Reserve Chairman Ben Bernanke had said: “The recovery appears to be proceeding at a moderate pace though somewhat more slowly than the committee expected and some recent labor market indicators have been weaker than expected”.

The weakness from these statements had been carried into the markets on Thursday, while the International Energy Agency’s announcement to release 60 million barrels of oil from strategic stockpiles dragged the energy sector, which subsequently led the broader markets lower. Crude oil futures plunged 4.6% to $91.02 per barrel. The Energy Select Sector SPDR (XLE) fund was down 1.1% and stocks including Chevron Corp. (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), Marathon Oil Corporation (NYSE:MRO), Hess Corporation (NYSE:HES) and Petroleo Brasileiro (NYSE:PBR) dipped 1.7%, 1.7%, 2.2%, 2.6% and 2.2%, respectively.

However, a drop in crude prices helped airline stocks, including United Continental Holdings, Inc. (NYSE:UAL), Delta Air Lines Inc. (NYSE:DAL), AMR Corporation (NYSE:AMR), US Airways Group, Inc. (NYSE:LCC) and Southwest Airlines Co. (NYSE:LUV) which jumped by 4.8%, 3.7%, 5.2%, 5.1% and 3.5%, respectively.

Economic reports provided little cheer to the broader markets as initial claims rose last week and new home sales declined in May. The US Department of Labor reported: “In the week ending June 18, the advance figure for seasonally adjusted initial claims was 429,000, an increase of 9,000 from the previous week’s revised figure of 420,000. The 4-week moving average was 426,250, unchanged from the previous week’s revised average of 426,250”. On the contrary, the consensus for the current period had projected initial claims for the last week to have been 416,000. For the week ending June 11, the seasonally adjusted insured unemployment rate remained unchanged at 2.9%.

Meanwhile, a report from U.S. Census Bureau and the Department of Housing and Urban Development said sales of new single-family houses had dropped 2.1% from April to a seasonally adjusted annual rate of 319,000 in May 2011. However, the figure is 13.5% higher than the May 2010 estimate of 281,000.

Amid such concerns, news from the European corner rejuvenated investor sentiment and lifted the markets from session lows. According to reports, Greece, the European Union and the International Monetary Fund have agreed to a five-year austerity plan. Greece will therefore receive an additional $5.4 billion of tax increments and spending cuts.  Olli Rehn, the European commissioner for economic and monetary affairs, commented that EU was up for allowing a stimulus plan to Greece, adding: “the first thing is that Greece must help itself so that the other Europeans can help Greece”. Greek Prime Minister George Papandreou will need to push through the deal in the Parliament to save Greece from a debt default. Nonetheless, with the agreement still pending the Parliament’s approval and the details of the deal being unknown, skepticism prevailed.

AMR CORP (AMR): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

DELTA AIR LINES (DAL): Free Stock Analysis Report

HOME DEPOT (HD): Free Stock Analysis Report

HESS CORP (HES): Free Stock Analysis Report

INTEL CORP (INTC): Free Stock Analysis Report

US AIRWAYS GRP (LCC): Free Stock Analysis Report

SOUTHWEST AIR (LUV): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

PFIZER INC (PFE): Free Stock Analysis Report

UNITED CONT HLD (UAL): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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