Greek Hopes, Upbeat Data Lead To Higher Close On Wall Street - U.S. Commentary

(RTTNews) - Following the rebound seen in the previous session, stocks continued to recover from Monday's sell-off during trading on Wednesday. The markets benefited from a positive reaction to the latest news about Greece as well as some upbeat U.S. economic data.

The major averages moved to the upside going into the close but still ended the session well off their best levels of the day. The Dow advanced 138.40 points or 0.8 percent to 17,757.91, the Nasdaq rose 26.26 points or 0.5 percent to 5,013.12 and the S&P 500 climbed 14.31 points or 0.7 percent to 2,077.42.

The strength on Wall Street came as the latest developments regarding the Greek debt crisis led to some optimism about a potential deal.

While Greece failed to make a 1.55 billion euro payment to the International Monetary Fund, Greek Prime Minister Alexis Tsipras sent a letter indicating he will accept most of the demands made by the country's creditors.

The two-page letter, obtained by the Financial Times, was sent to the heads of the IMF, the European Commission, and the European Central Bank.

However, German Chancellor Angela Merkel and Eurogroup President Jeroen Dijsselbloem have both said further negotiations will have to wait until after the Greek referendum on Sunday.

Tsipras has called on Greeks to vote "no" in the referendum, which he claimed is not an up or down vote on Greece's membership in the eurozone.

The Greek Prime Minister argued that voting against the proposals offered by creditors would give the government more leverage in the negotiations.

Buying interest was also generated by the release of some upbeat U.S. economic data, including a report from payroll processor ADP showing private sector employment increased by more than expected in the month of June.

ADP said employment in the private sector jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May. Economists had expected an increase of about 220,000 jobs.

Additionally, the Institute for Supply Management released a report showing that its manufacturing index rose by slightly more than expected in June.

The ISM said its purchasing managers index rose to 53.5 in June from 52.8 in May, with a reading above 50 indicating an increase in manufacturing activity. Economists had expected the index to edge up to 53.2.

Sector News

Commercial real estate stocks saw considerable strength on the day, driving the Morgan Stanley REIT Index up by 1.5 percent. With the gain, the index climbed further off the eight-month closing low set on Monday.

Cousins Properties (CUZ), Post Properties (PPS), and Macerich (MAC) turned in some of the real estate sector's best performances.

Significant strength was also visible among financial stocks, with the NYSE Arca Broker/Dealer Index and the Dow Jones Banks Index climbing by 1.2 percent and 1.1 percent, respectively.

Pharmaceutical, housing, and retail stocks also saw notable strength, contributing to the higher close by the broader markets.

On the other hand, oil service stocks moved sharply lower, dragging the Philadelphia Oil Service Index down by 3 percent. With the drop, the index fell to a three-month closing low.

The weakness among oil service stocks came amid a sharp drop by the price of crude oil, with crude for August delivery plunging $2.51 to $56.96 a barrel.

Gold, natural gas and airline stocks also came under pressure on the day, partly offsetting the strength seen in the aforementioned sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Wednesday. Japan's Nikkei 225 Index rose by 0.5 percent, while Hong Kong's Hang Seng Index jumped by 1.1 percent. However, China's Shanghai Composite Index bucked the uptrend and plunged 5.2 percent.

Meanwhile, the major European markets all moved sharply higher on the day. While the U.K.'s FTSE 100 Index surged up by 1.3 percent, the French CAC 40 Index and the German DAX Index soared by 1.9 percent and 2.2 percent, respectively.

In the bond market, treasuries showed a notable move to the downside after ending the previous session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.3 basis points to 2.418 percent.

Looking Ahead

News regarding Greece is likely to remain in focus on Thursday, but traders are also likely to keep a close eye on the Labor Department's monthly jobs report. The report is being released a day earlier than usual due to the July 4th holiday.

Economists currently expect the report to show an increase of about 230,000 jobs in June following the jump of 280,000 jobs reported for May. The unemployment rate is also expected to dip to 5.4 percent.