Markets closed mixed on Wall Street today: Dow -0.35%, S&P +0.09%, Nasdaq +0.86%, Oil +0.54%, Gold +0.95%.
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Today’s markets were mixed because:
1) No budget deal. Democrats and Republicans, the House and the Senate, tax hikes vs. spending cuts…the debate continues as we head into another weekend with no debt deal. Yesterday the New York Times reported that we were close, but the White House quickly denied it. There are three main proposals in Congress: the Senate’s “Gang of Six” plan, which contains both large spending cuts and significant changes to the tax code; the Obama-Boehner plan, a bit more conservative but still not being embraced by the right; and the House’s “Cut, Cap and Balance” act that’s already been rejected by the Senate today, the majority being angered by the plan’s complete disregard of any tax reform whatsoever. It’s a game of chicken: Republicans aren’t ceding any ground, expecting the Democrats to flinch first as they barrel toward the August 2 deadline to raise the debt ceiling.
2) Greek bailout plan. Yesterday, European leaders held yet another summit to discuss plans for Greece’s bailout. But this time they came up with a plan of action. While the plan would allow for Greece to technically go into default, it seemed the best option for preventing the spread of Greece’s debt problems and for helping the Greece’s economy to recover. At issue for some time now has been the level of private sector involvement in the bailout. It was ultimately decided that as much as 50 billion euros would be raised by private sector buyers of Greek bonds. The Greece news boosted global markets and the euro, but wasn’t enough to keep American markets up as we continue to face our own debt crisis.
3) Tech sector. The tech-heavy Nasdaq (NASDAQ:QQQ) was the only major index to show significant gains today, with chip makers (NYSE:SMH) Sandisk (SDSK) and Advanced Micro Devices (NYSE:AMD) leading the semiconductor sector after reporting better-than-expected second-quarter earnings and raising their full-year revenue forecasts. Sandisk closed up 9.62% and AMD closed up 19.23%. Other tech firms rode the wave, including Micron (NASDAQ:MU), Microchip Technology (NASDAQ:MCHP), and Seagate (NASDAQ:STX), all gaining over 3%.