(AP) Stocks gain as Greek nears a deal on debt swap
By EILEEN AJ CONNELLY
AP Business Writer
The stock market posted substantial gains Thursday as Greece closed in on a deal to restructure its debt and avoid a default. That overshadowed a small increase in unemployment claims last week.
The Dow Jones industrial average closed up 70.61 points, or 0.6 percent, at 12,907.94. Two days of solid gains have erased about three-quarters of the losses from Tuesday, when the Dow fell 203 points, its biggest loss of the year.
The close left the Dow up 97 percent since March 9, 2009, its low point during the Great Recession. Last week, the Dow closed above 13,000 for the first time since May 2008. The Standard & Poor’s 500 index has more than doubled in three years.
On Thursday, the S&P 500 added 13.28 points, or 1 percent, to 1,365.91. It has gained 22.80 points since Tuesday, its best two days since December. All 10 industry groups rose, led by materials companies.
The Nasdaq composite index rose 34.73 points, or 1.2 percent, to 2,970.42.
A Greek government official told The Associated Press that more than 75 percent of investors in Greek bonds had agreed to exchange them for bonds with a lower face value and interest rate.
Greece needs 90 percent of investors to participate to get a bailout of euro130 billion, or about $173 billion, and avoid a default later this month that could rattle financial markets around the world. The Athens government will release final results Friday.
The Greek crisis is “starting to wind down, we hope,” said Paul Powers, head of U.S. equity sales trading for Raymond James. “It doesn’t seem nearly as dire as it was a couple of weeks ago.”
The rally came despite a report from the Labor Department that the number of people seeking unemployment benefits rose slightly more than expected last week. The four-week average remained near a four-year low.
The government reports Friday on how many jobs the U.S. economy added in February and the unemployment rate. Economists expect 200,000 jobs were added. If the unemployment rate falls from 8.3 percent, it would be the sixth straight decline.
He pointed to a private estimate of hiring released Wednesday that exceeded expectations, along with the unemployment claims figures, as good indicators for more positive news.
Stocks rose around the world as optimism about the Greek debt deal took hold. In Europe, the FTSE 100 index of leading British stocks closed up 1.2 percent. Germany’s DAX and the CAC-40 in France both gained 2.5 percent.
The euro rose almost a penny and a half against the dollar, to $1.328. In another sign of investor confidence in Europe, the yields on government bonds of both Italy and Spain both fell.
Asian markets also rallied, ending a three-day losing streak. Japan’s Nikkei Stock Average climbed 2 percent, Hong Kong’s Hang Seng jumped 1.3 percent and China’s Shanghai Composite Index rose 1.1 percent.
The prospect of a successful bond swap in Greece also helped push oil prices higher. Resolving the crisis would be good for the European economy, and demand could rise. Oil closed near $107 per barrel on the New York Mercantile Exchange. Gold prices also rose.
The yield on the benchmark 10-year U.S. Treasury note rose to 2.01 percent from 1.98 percent late Wednesday.
Brian Gendreau, market strategist for Cetera Financial Group, said that even if some of Greece’s private investors reject the bond swap deal, the situation in Europe is clearly improving.
Gendreau said the market’s response to a possible Greek default would not be as harsh as last year, when some wondered whether the euro might collapse. He would expect “fatigue and exasperation. But that’s not the same as panic and crisis.”
Among stocks making big moves Tuesday:
_ Coach Inc. jumped 4.6 percent after the luxury accessories maker said it is sticking to its long-term sales goals.
_ McDonald’s Corp. lost more than 3 percent after reporting slower growth in February.
_ American International Group Inc. fell 1.1 percent after the U.S. government said it would sell $6 billion of the common stock it holds in the bailed-out insurer.