U.S. Stocks Rise on Optimism That Greek Debt Deal Will Be Done

NEW YORK (AP) -

U.S. stocks logged their best day in two months Friday as Greece appeared to move closer to securing a bailout deal that will enable it to avoid bankruptcy and keep the country in the euro.

A second day of gains for Chinese stocks also encouraged investors. U.S. stocks had fallen sharply on Wednesday, in part on concern that a monthlong slump in China’s stock market could crimp growth in the world’s second-largest economy.

The Standard & Poor’s 500 index rose 25.31 points, or 1.2 percent, to 2,076.62. The Dow Jones industrial average climbed 211.79 points, or 1.2 percent, to 17,760.41. The Nasdaq composite gained 75.30 points, or 1.5 percent, to 4,997.70.

The gains pushed the S&P 500 back into positive territory for the year.

On Friday, stocks in China jumped before the U.S. market opened. China’s Shanghai Composite Index jumped 4.5 percent, paring its losses for the month to 24 percent.

The Chinese market is only recovering after the government intervened heavily and about half of the companies listed in mainland China suspended trading in their stocks.

Back in the U.S., airline stocks rallied after American Airlines, the nation’s largest carrier, signaled that it was cutting back on its growth plans this year amid signs that average fares are declining. American said it expects to increase passenger-carrying capacity by 1 percent this year, down from an earlier forecast of 2 percent. American Airlines rose $1.54, or 3.9 percent, to $41.21. Delta Air Lines jumped $1.91, or 4.7 percent, to $42.46.

Investors also followed a speech by Federal Reserve Chair Janet Yellen on Friday.

Speaking in Cleveland, Ohio, Yellen said that the Fed is on track to start raising interest rates later this year, but expressed concerns over headwinds that are still holding back the U.S. economy, in particular lingering weakness in the labor market and new potential threats overseas.

Investor start focusing on second-quarter earnings next week as the pace of company reporting picks up.

Companies in the S&P 500 are forecast to report that earnings shrank by 4.5 percent on average. While that would be the first contraction in earnings in almost six years, the figures are distorted by a big drop in energy company earnings following the collapse in the oil price last year.

In bond trading, prices fell. The yield on the 10-year Treasury note climbed to 2.40 percent from 2.32 percent on Thursday. The euro surged against the  dollar, climbing 0.7 percent to $1.1151. The dollar rose 0.7 percent against the Japanese currency, to 122.80 yen.

The price of oil declined slightly and ended the week down 7 percent on concerns about economic growth in Europe and China as well as robust production from U.S. drillers. Benchmark U.S. crude fell 4 cents to close at $52.74 a barrel in New York. It ended last week at $56.93 a barrel. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 12 cents Friday to close at $58.73 a barrel in London.

In metals trading, silver rose 12 cents to $15.47 an ounce. Gold dropped $1.30 to $1,157.90 an ounce. Copper fell 1.3 cents to $2.55 a pound.

In other futures trading on the New York Mercantile Exchange:

  • Wholesale gasoline fell 2.8 cents to close at $2.017 a gallon.
  • Heating oil fell 0.4 cent to close at $1.740 a gallon.
  • Natural gas rose 4.4 cents to close at $2.770 per 1,000 cubic feet.