Thursday, October 27, 2011

I suppose good news is worth 370 points?

One day's worth of good economic news sent the stock market soaring today. At the close of the day, it was up 370 points. FOX Business examines what led to the positive day on Wall Street.
The blue-chip average crossed 12000 for the first time since August, and is within 700 points of reaching its highest close in 2011.  Indeed, the Dow is nearly 1,400 points off of its 2011 lows. Meanwhile, volatility plunged 16%, and yields on government debt rose, indicating traders are rushing back into equity markets. 
Financials were the best performers on the day, followed by energy and basic materials shares.  Defensive stocks, like healthcare and consumer staples, however, lagged far behind the broader markets.

Wall Street has been driven higher and lower by headlines from across the Atlantic in recent months as market participants have fretted over the specter that the euro zone debt crisis could spark another credit crunch and seize already fragile global economies.  
Policymakers meeting at a summit in Brussels forged a deal early Thursday morning that analysts say represents a major step forward for the 17-member currency bloc.
European leaders did come to a deal early today (U.S. EDT) to rein in the looming Euro and debt crisis, with Greece the most desperate nation. Reuters explores how the deal wasn't good -- at least not immediately -- for the U.S. dollar.

The dollar took its biggest beating against a broad range of currencies in 2-1/2 years on Thursday as investors celebrated Europe's plan to contain its two-year-old debt crisis by dumping the safe-haven greenback.

The dollar appeared the biggest loser from the deal, which could refocus attention on weak U.S. budget fundamentals. The U.S. currency fell two percent to a seven-week low against the euro and slumped to a record low against the yen.

The agreement to slash Greece's debt burden and strengthen the region's financial rescue fund appeared to remove the specter of a crisis spreading through the world's financial system.
In fairness, as the New York Times notes, it wasn't just the U.S. stock market that relished the European debt deal.
The Euro Stoxx 50 index, a barometer of euro zone blue chips, closed up 6.1 percent, while the FTSE 100 index in London gained 2.9 percent. In Paris, the main index was up 6.3 percent, while Frankfurt’s was 5.35 percent higher.
Financial shares led European indexes.
Hey, just think what might happen to stocks if the U.S. governmental leaders were able to hammer out a real deal to cut into the deficit, tighten spending and lower the unemployment rate, not to mention spur economic growth, strengthen laws to improve the environment, get infrastructure improvements....

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