Today rather than a wall of worry, the market saw a wall of gains. The Dow posted the biggest one day gain in 2012 during today’s trading session. Mostly on rumors of further joint central bank stimulus. The ECB (European Central Bank) president Mario Draghi left the door open for further action as the EuroZone situation develops.
Interestingly the Queens Jubilee celebration has a bit deeper meaning. All throughout recorded history “jubilee’s” have been times of debt forgiveness. Although no one is expecting the Queen to write a check anytime soon.
The big question now is have the markets got ahead of themselves? Today’s rally was a snap back rally after an oversold market. Although at a 2%+ one day rally we might have gone a bit too far too fast.
The news out of Europe for a Europe-wide banking union (i.e. a back stop for banks like the FDIC which we have here in the States) won’t go into effect for years and really does nothing to address the current crisis. Although the plan could point to the conclusion that Greece will stay in the union, get a bailout, and then plans being put in place now will eliminate the same problem reoccurring a few years down the road.
The FED’s “Biege Book” (a report on economic activity amongst the Federal Reserve’s 12 regional districts) showed that the US economy expanded moderately during April and May. The FED said “contacts were slightly more guarded in their optimism” however outlook remains positive.
The Dow (INDU) gained 286.84 points at +2.37%, the Nasdaq (COMP) gained 66.61 points at +2.40%, and the S&P 500 (SPX) gained 29.63 points at 2.30%.
Oil rose 73 cents to close at $85.02 a barrel.
Gold fell $17.30 to close at $1,634.20 a troy ounce.
The US 10-Year Note fell today pushing yields to 1.65%, but don’t get fooled here – if the FED does ease further that yield will fall back down and create new all time lows.