U.S. stocks traded higher Wednesday, with the Dow Jones Industrial Average leaping 100 points on renewed hopes Greece would strike a bailout deal with its international creditors after Athens defaulted on its debt payment to the International Monetary Fund a day earlier. The default risks the country’s place in the eurozone, sparking concerns Greece may exit the 19-member currency bloc.
Eight out of the 10 S&P 500 sectors traded higher Wednesday, driven by a 1 percent gain in the financial sector.
In afternoon trading, the Dow (INDEXDJX:.DJI) added 111.47 points, or 0.63 percent, to 17,730.98. The Standard & Poor’s 500 index (INDEXSP:.INX) gained 11.39 points, or 0.55 percent, to 2,074.32. And the Nasdaq Composite (INDEXNASDAQ:.IXIC) rose 20.56 points, or 0.41 percent, to 5,007.34.
Dow component Travelers Companies Inc. led the index higher, adding 3.5 percent, while Intel Corp. was the biggest laggard, down nearly 1 percent.
U.S. equities opened sharply higher following the opening bell on renewed optimism after the Greek government said in a letter to creditors the country is willing to concede ground in discussions, Reuters reported. However, a separate report released later on Wednesday said Greece will proceed with its Sunday referendum after international creditors rejected a new proposal for budget cuts and policy reforms, the Wall Street Journal reported.
The U.S. stocks market plunged earlier this week on fears Greece would go bankrupt, with the Dow tumbling more than 300 points Monday to close out its worst day of the year. Greece later defaulted on its IMF repayment of 1.6 billion euros ($1.77 billion) at midnight in Athens on Wednesday.
But experts say the escalation of the Greek crisis, brought on by a referendum call by the Greek government, will likely end up with an accord.
“A Geek default does not mean a Greek exit from the euro, though it is likely to be very trying for the Greek people and end up with painful social unrest,” Pete Cardillo, chief market economist at Rockwell Global Capital, said in a note Wednesday.
Separately, the U.S. manufacturing sector grew at its fastest rate of the year in June. The Institute for Supply Management said its manufacturing index rose to 53.5 last month from 52.8 in May.
Economists expect manufacturing activity to strengthen in the latter half of the year, despite concerns about the outlook for foreign demand.
“We expect recent drags on manufacturing activity, including a stronger U.S. dollar, sluggish global growth and weak mining activity, to gradually dissipate in the latter half of the year,” Greg Daco, head of U.S. macroeconomics at Oxford Economics, said in a research note.
Looking ahead, economists are turning their attention to Thursday’s highly anticipated employment report for June, which is forecast to show another strong month of U.S. job creation. Cardillo expects employers added 250,000 new jobs last month, down from 280,000 in May. The unemployment rate is forecast to tick down to 5.4 percent.
“The U.S. economy is headed for stronger growth as the jobs expansion improves on all fronts, including wages and the participation rate levels,” Cardillo said.