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Midday Market Update

Stocks Rise as Cyprus Seeks Solution

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U.S. Market    
Stocks rose this morning as Cyprus scrambled to approve a bailout package to save its financial system.

Lawmakers in Cyprus are working to pass a plan that would allow it to receive a bailout from the EU and IMF to prop up its ailing banks.  There are several proposals on how the small island nation will come up with the 5.8 billion euros they need, but it is not clear that any one plan has the support of parliament. A government spokesman said that the future of the country will be decided in the “next few hours.” If the government can’t come up with a credible plan by Monday, the European Central Bank will pull its emergency liquidity and the banks will fail.

At midday the Dow and S&P 500 were each up 0.6% while the Nasdaq was 0.4% higher.

Stocks on the Move
 Nike's (NKE) ongoing focus on innovative products and super brand image creation continues to  drive outperformance in North America and is allowing the European business to hold up despite a tough macro environment. Most notable in the quarter was the return to gross margin improvement (up 30 basis points to 44.2%), as roughly two years of cost pressures from commodities inputs, labor costs, shipping, and mix have been affecting gross margins for a time that may seem fatiguing to some investors. Shares soared 11.8% on the report.

Shares of  Darden Restaurants (DRI) were up 1.3% at midday after the firm reported an 18% drop in fiscal third-quarter profit. The firm’s three largest chains (Olive Garden, Red Lobster, and LongHorn) posted a 4.6% decline in same-store sales in the quarter. Total sales were up  4.6% while expenses rose 7.4%.

Foreign Markets
European shares erased early losses today. In late trading, Germany’s DAX was unchanged, the Paris CAC was up 0.3% while the FTSE 100 was 0.5% higher.

Asian markets were mixed on the day. The Shanghai Composite was up 0.2%, while the Hang Seng and Nikkei 225 were down 0.5% and 2.4% respectively.

Jeremy Glaser does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.