Wednesday, July 1, 2015
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Market Digest Online WEDNESDAY, JULY 1, 2015: U.S. stocks closed higher on Tuesday in a slight recovery from the worst trading day of the year, as investors remained on edge amid the imminent Greece repayment deadline to the IMF. The S&P 500 posted its smallest gain on record (going back to 1928) for the first half of the year, up just 0.20 percent. The index ended the quarter 0.24 percent lower, ending 9 consecutive quarterly gains. The Dow Jones industrial average closed about 1.1 percent lower for the first half of the year and posted a 0.89 percent loss for the second quarter. The Nasdaq had the best performance, up 5.3 percent for the year so far and up 1.75 percent for the second quarter, boosted by a surge in the Nasdaq iShares biotechnology ETF (IBB) and gains in Apple.

Greece faces a 1.5 billion euro ($1.7 billion) payment due to the International Monetary Fund at midnight CEST (6:00 p.m. ET) Tuesday. A euro zone official said in a Reuters report that there's "no way" the Eurogroup will release funds for Greece to meet the deadline tonight. David Kelly, chief global strategist at JPMorgan Funds, said investors were watching rather than reacting significantly to the Greek headlines. He noted stocks are little changed so far this year, with the S&P barely half a percent higher. "We're waiting for what we think will be a good jobs number," he said. "Economies are improving and ought to support a higher stock market."

Separately, Finnish Finance Minister Alexander Stubb said the Eurogroup concluded that requests from Prime Minister Alexis Tsipras for an extension of Greece's bailout program or debt relief were not possible, Reuters reported. The prime minister said the government will seek a viable solution until the end and aims to stay in the euro, Reuters reported. The Greek government also issued a statement saying it has prepared a two-year agreement with the euro zone bailout fund in order to cover its financing needs, Dow Jones reported.

German Chancellor Angela Merkel said on Tuesday that Germany would not negotiate on a new bailout agreement for Greece before its referendum which is planned for Sunday. "There's still a downward trend in place. At this juncture markets are holding relatively steady, otherwise holding their breath until the weekend," said Eric Lascelles, chief economist at RBC Global Asset Management. "The market's default assumption is that Greece does miss that deadline."

The Dow and S&P both briefly turned negative in midday trade amid reports that S&P downgraded four of Greece's banks to "selective default." The indices turned higher after struggling to hold slight gains. "The Greece situation continues to grind on. It's not encouraging. (But) you had a selloff and a pause. It suggests not panicking," said Bruce McCain, chief investment strategist at Key Private Bank. "It's more the assessment that this is not the crisis with Lehman Brothers or other situations that lead to broader systemic problems," he said.

European stocks extended Monday's selloff to end more than 1 percent lower as Greece was expected to default later that night. The Greece stock exchange and banks remained closed on Tuesday.

The dollar gained more than half a percent against major world currencies, with the euro below $1.12. Asian stocks rebounded on Tuesday, with Shanghai leaping 5.55 percent amid new supportive measures from the government.

The Dow Jones Industrial Average closed up 23.16 points,or 0.13 percent, at 17,619.51, with Walt Disney leading advancers and Wal-Mart the greatest decliner. The two stocks are the best and worst performers in the index year-to-date, respectively. The S&P 500 closed up 5.48 points, or 0.27 percent, at 2,063.12, with energy leading seven sectors higher and telecommunications the greatest laggard. Health care is the best sector year-to-date and utilities the worst. The Nasdaq closed up 28.40 points, or 0.57 percent, at 4,986.87.

Crude oil futures for August delivery settled up $1.14, or 2 percent at $59.47 a barrel on the New York Mercantile Exchange. Gold futures ended $7.20 lower at $1,178.00 an ounce.

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