3 Reasons Markets Were Up on Hope for Greece
Markets closed up on Wall Street today: Dow +1.27%, S&P +1.35%, Nasdaq +1.60%, Oil -1.82%, Gold -0.44%.
On the commodities front, Oil (NYSE:USO) declined to $88.57 a barrel. Precious metals also declined, with Gold (NYSE:GLD) falling to $1,822.00 an ounce while Silver (NYSE:SLV) fell 1.06% to $40.76 an ounce.
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Today’s markets were up because:
1) Greece. Following a telephone conference call with Greek Prime Minister George Papandreou and French President Nicolas Sarkozy, German Chancellor Angela Merkel stressed the importance of Greece staying in the euro zone, alleviating fears that Greece might be ejected from the euro zone if it failed to make steps toward improving its debt situation. Papandreou affirmed that, despite a few hiccups in negotiations, Greece planned to make the necessary fiscal steps required of the nation as part of its bailout package.
2) France. While Moody’s downgraded two of France’s big three banks, Crédit Agricole and Société Générale, the downgrades weren’t as extreme as expected. Bank of France governor Christian Noyer noted that Moody’s had a higher rating for the banks than the other major agencies, so the small downgrade only “put them on the same level or slightly better than the others”. Furthermore, it put the banks on par with other major European banks. Noyer used the downgrade as an opportunity to express his confidence in the banks’ abilities to stay afloat, and said that there has been no talk of nationalizing the three banks, which are considered integral to the French economy, as they lend billions of euros to businesses and individuals.
3) Retail. Positive news from Greece, France, Italy, and seemingly every other source of concern in Europe outweighed disappointing economic data in the U.S., where retail sales were completely flat in August, according to the Department of Commerce. Of course, the news was not unexpected, as an earlier report had consumer confidence declining to its lowest level in three years last month as Congress continued to battle over spending. However, the figures were still a disappointment, as August retail sales were expected to rise 0.2%. The report also downwardly revised its growth figure for July from 0.5% to 0.3%. Commerce Department data has spending for the first two months of the quarter significantly weaker than economists had predicted. Auto sales declined 0.3% last month despite efforts by Toyota (NYSE:TM) to get production back on track. Of course, high gas prices (NYSE:UGA) may have had something to do with that. Gasoline sales rose 0.3% in August, good news for Exxon (NYSE:XOM) and Shell (NYSE:RDS.A) but bad news for Ford (NYSE:F) and General Motors (NYSE:GM).