Bad news, but Wall Street up!
by Peter Switzer
So, why the cynicism towards the indicator I most use for predicting both short- and long-term trends? Well, yesterday the Street’s expert movers and shakers were worried about the credibility of the Spanish bank bailout but today the index is up over 100 points.
The Dow ended up 162.57 points or 1.31 per cent to 12,573.8. Meanwhile the S&P 500 index put on 15.25 points or 1.16 per cent to 1324.18.
So, how come? Let’s investigate. This is what looked like market-moving news:
- Fitch downgraded 18 Spanish banks
- It also lowered Spain’s sovereign credit rating to BBB
- Spain’s 10-year bond went to 6.807 per cent, which is the highest since the country joined the eurozone
- Greek election fears remain for Sunday
- European shares went higher ignoring Fitch
- Small business optimism dipped a bit but nothing dramatic.
As you can see, there was precious little to explain why Wall Street sold off on the bailout news for Spain but then they buy when Fitch downgrades Spain and its banks!
The reality is that techies say the key indexes seem to be making a credible bottom, which leaves them poised to shoot higher if the Greek election makes optimists look sensible.
As I said yesterday, we’re awaiting key news on Europe, the USA and China but the European Union is the main game and we have to hope that the voters in Greece and the 17 countries’ leaders of the eurozone can convince the market players of the world, and more importantly, the ones on the sidelines with cash, that stocks are the place to be.
They have to do a bit a work over the next few months to pull that one off!
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Published on: Wednesday, June 13, 2012
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