Courtesy of John Nyaradi.
Financials and rapid fire news from Europe lead to a wobbly, but positive day on Wall Street.
After a sharp opening rally, markets wobbled but managed to end strongly into the close as players reacted to uncertainty and opportunity on the way to the European summit meeting in Brussels on Thursday and Friday.
The Dow Jones Industrial Average gained +0.65% while the Nasdaq added +1.1% and the Russell 2000 gained +1.6%.
But the financial sector (NYSEARCA:XLF) was the story of the day as it gained 2.7% on the strength of hefty gains in major U.S. banks including Bank of America (NYSE:BAC) gaining +2.8%, Citi (NYSEARCA:C) jumping 5.9%, Goldman Sachs (NYSE:GS) adding 2.6% and Wells Fargo (NYSE:WFC) jumping +2.6%.
These gains obviously come on the hope that the European debt crisis will be resolved, finally, this week and so these major U.S. banks would not be swept up in any firestorm erupting in Europe if this week’s summit fails. However, the day’s early euphoria was dampened by reports that ratings agency S&P was planning to downgrade the entire Euro Zone,(NYSEARCA:EFA) including Germany and France, which would put a major damper on any financial rescue facilities that might be on the table. After the close, the announcement was made that fifteen euro-zone countries would be placed on credit watch negative which includes financial heavyweights, Triple A countries France and Germany, along with smaller players Austria, Netherlands and Finland.
In more mundane news, the IMF approved another 2.2 Billion Euro lifeboat for Greece and the ISM Services sector at home slowed to levels last seen nearly two years ago.
On a technical basis, the S&P 500 challenged the all important 200 day moving average but failed to hold that level and so market technicians will be watching for the results of another attempt that will surely come within the next few day.
Bottom line: Everything depends on Europe (NYSEARCA:EFA) and Friday’s announcement at the summit’s conclusion. So far, markets believe it will be a happy day.
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