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US STOCKS-Wall Street gains modestly after two-day selloff

Source : REUTERS
Last Updated: Fri, Jun 21, 2013 14:00 hrs

* News Corp spinoff to replace Apollo Group in S&P 500

* Tesla unveils battery pack swap, shares rise

* Oracle slides before market open after results miss

* Indexes: Dow, S&P up 0.5 pct, Nasdaq flat

By Rodrigo Campos

NEW YORK, June 21 (Reuters) - U.S. stocks edged higher at the open on Friday, bouncing back from a two-day selloff triggered by concern over the future of central bank stimulus, but major indexes were still on track to post sharp losses for the week.

A sharp drop in Oracle shares offset kept the Nasdaq Composite little changed.

Share prices had slumped since Wednesday, when Federal Reserve Chairman Ben Bernanke laid out the Fed's plans to pull back on its $85 billion in monthly asset purchases.

Volatility, which has spiked since May 22 when Bernanke first hinted that the Fed may begin to rein in its stimulus measures, is expected to continue. The CBOE Volatility Index , a gauge of anxiety on Wall Street, jumped 23 percent on Thursday to 20.49, the first time this year it closed above 20.

"While volatility is going to remain high, the market next week will move to a consolidation phase," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

"We'll bounce around 1,575/1,600 (on the S&P 500) as a recovery stage begins to take hold."

Cardillo pointed to the quarterly expiration and settlement of June equity options and futures contracts on Friday as another volatility trigger for the trading session.

About $14 billion is expected to change hands in index rebalancing-related trading towards the session's close, according to Credit Suisse, which could compound volatility.

The Dow Jones industrial average rose 72.25 points or 0.49 percent, to 14,830.57, the S&P 500 gained 8.44 points or 0.53 percent, to 1,596.63 and the Nasdaq Composite added 1.47 points, or 0.04 percent, to 3,366.1.

The S&P was down almost 2 percent for the week. The largest weekly decline so far this year is 2.12 percent.

Facebook shares rose 2.5 percent to $24.49. UBS raised its rating on the stock to "buy" from "neutral."

Oracle Corp dropped 9.4 percent to $30.11 a day after the tech giant missed expectations for software sales and subscriptions for a second straight quarter.

Tesla Motors rose 1.4 percent to $102.04 after the electric car maker unveiled a system to swap battery packs in about 90 seconds in a move to overcome fears about driving range.

S&P Dow Jones Indices said Thursday that News Corp's spinoff News Corp will replace Apollo Group in the S&P 500. The old News Corp, which is changing its name to 21st Century Fox, will remain in the S&P 500. The change is effective after the close of trading Friday, June 28. Apollo shares edged 0.4 percent lower to $19.66.

China's central bank faced down the country's cash-hungry banks on Friday, letting interest rates spike as it increased pressure on banks to curb rampant informal lending and speculative trading. Some worry that its approach could backfire, creating the potential for defaults and gridlock in the money markets of the world's second-largest economy.



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