15 Reasons Banks, Techonology and Greece Dominated Markets
Dow 12,004 S&P500 1,271 Nasdaq 2,616 Gold 1,540 Oil 92
The Dow (NYSE:DIA) and S&P (NYSE:SPY) barely budged this week. However, the Nasdaq (NASDAQ:QQQ) had troubles as Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) broke below critical technical levels. Oil (NYSE:USO) finally started a serious leg down. Gold (NYSE:GLD) and Silver (NYSE:SLV) continued to hover.
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Now, for the 15 reasons markets moved this week:
1) Banks caught a bid. The financial sector makes up 14% of the S&P 500 Index, and today, the biggest banks were all in the green, including Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Wells Fargo (NYSE:WFC), Citigroup (NYSE:C), and JPMorgan (NYSE:JPM). While the 0.07% boost to the index wasn’t quite as high as Citigroup’s 3.30%, the banks (NYSE:KBE) helped buoy the S&P, preventing it from continuing its downward trend.
2) M&A was plentiful, but not powerful. News this morning about a number of big mergers and acquisitions boosted the market, but M&A news failed to sustain early optimism and the indexes fizzled throughout the day.
3) Obama focused on the economy. The President was in Durham, N.C. today meeting with business owners and speaking about his plans to create jobs, get the budget under control, and re-boot the economy. His presence in Durham and his meetings with representatives from various businesses helped push up individual stocks, but failed to boost market confidence on a grander scale. Check Out:Investing in LEDs: Investors Take Stock Tips from Obama.
1) Retail sales shocked the doom-and-gloomers. Funny thing about the uber-bears is they are spot about consumers when Oil (NYSE:USO) spikes, but they always forget to adjust expectations when the facts change. Today retail shorts melted first when Best Buy (NYSE:BBY) announced strong earnings and then when the Commerce Department showed retail sales grew 0.3% (ex-food and gas).
2) Surprise! China is still growing. A ton of the recent selling has been on the playbook that slowing growth in China (NYSE:FXI) will drag down the world economy. Well, at least the Chinese government says China is growing just fine. That was the main catalyst for stocks to pop today as global shorts unwound enough shares to accommodate China’s data.
3) Solar stocks were on fire. Google (NASDAQ:GOOG) threw down some big support to SolarCity to help boost growth in residential solar power (NYSE:TAN). Check Out: Here’s Why Solar Stocks are On Fire Now.
1) The Achilles Heel is back. Greece has stormed back into the spotlight with drama, violence, and money. It’s a terrible scene and investors are selling everything and asking questions later. Don’t Miss our complete Cheat Sheet to the unfolding situation in Greece.
3) US economic data was stagflationary. This morning we learned builder confidence is down (NYSE:XHB) while consumer prices continue to rise. Another data set investors didn’t want to see on a day like today.
1) Banks caught in the middle. Normally the top banks (NYSE:KBE) are birds of a feather, all in the green or all in the red. But today they’re all over the map with Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) showing gains today while Citigroup (NYSE:C) and JPMorgan (NYSE:JPM) suffered losses. Don’t Miss: How Badly Will a Greek Default Hurt US Banks?
2) How do you solve a problem like Greece? It’s as if everyone’s been waiting for Greece to implode or break off and float into the Mediterranean Sea. Instead, bad news steadily trickles in manageable doses. No restructuring yet, no default. The euro, though down, is still trading above where it was last summer. People are frozen in their tracks, wondering whether to run scared or wait it out. It’s like watching a train wreck at 15 miles per hour.
3) Indecipherable data reports. Yesterday the National Association of Homebuilders (NYSE:XHB) told us confidence was down for June, but then today we hear from the Commerce Department that housing starts, building permits, and housing completions were all up last month. Jobs data shows a 16,000 decrease in jobless claims, which is good news, but jobless claims still remain over 400,000, which is bad news. People are looking for economic cues from these reports and just aren’t getting a solid answer. Some things are getting worse, some are getting better, and everything is moving slowly.
1) Greece gets on track. Sort of. German Chancellor Angela Merkel and French President Nicolas Sarkozy both spoke Friday in a joint news conference, stressing the fact that they were working to preserve the stability of the euro while nearing a consensus on how to handle Greece’s bailout that won’t require private sector involvement while also (hopefully) preventing restructuring and default. The EU breathed a small, collective sigh of relief after the conference, and the euro made a 1.28% gain against the U.S. dollar.
2) Conflicting Data. Again. The Conference Board announced today that the Leading Economic Index for the U.S. showed an increase of 0.8% last in May, but a Thomson Reuters survey showed that consumer sentiment in June dropped even more than had been expected after being up in May. In the meantime, the housing market continues to be poor, and unemployment is a consistent problem. Despite yesterday’s announcement that jobless claims had decreased, companies like Research in Motion (NASDAQ:RIMM) are having lay off workers as net profits and revenue continue to decline.
3) Gas Prices. The one tiny beacon of hope comes in the form of lower gas (NYSE:UGA) prices, which continue to fall off record highs last month. Crude was trading over $100 a barrel last week but is now down around $93 today, with gas prices between $3.50 and $3.70 in most states, well below the $4-plus many were seeing in May.
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