Top 3 Reasons Markets Were Up After ‘Gang of Six’ Debt Proposal
Markets closed up on Wall Street today: Dow +1.63%, S&P +1.63%, Nasdaq +2.22%, Oil +1.74%, Gold -0.94%.
On the commodities front, Oil (NYSE:USO) made another reversal, climbing to $97.60. Precious metals fell, with Gold (NYSE:GLD) down to $1,587.30 an ounce and Silver (NYSE:SLV) down 3.40% to $38.97 an ounce.
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Today’s markets were up because:
1) Bipartisan deficit-reduction plan. One of the two main factors hurting global markets has been the stand-off between Republicans and Democrats in Congress over a deficit-reduction plan required before a decision to raise the debt ceiling can be reached. Until now, we’ve been barreling toward the Treasury’s August 2 deadline with little progress, but this afternoon Obama pledged his support of a bipartisan plan created by six Senators that would cut $3.7 trillion from the budget over the next 10 years, a number previously thought too ambitious. While the plan will still have to get at least some Republican approval in the House, which may not be easy, this could be the solution we’ve been waiting on for many months. Though markets started the day up, Obama’s news gave them quite an afternoon boost.
2) June housing starts. Today’s Department of Urban Housing and Development report showed that housing starts and building permits jumped in June, climbing well above Wall Street’s expectations and giving markets an early boost. Considering the poor housing market is one of the largest factors weighing down the economy, any growth in that sector comes as good news to all.
3) Industrials. Just yesterday, this was one of our “3 reasons markets were down”, but today industrials (NYSE:XLI) staged the Dow’s largest one-day rally of the year. The Dow gained 202 points and 27 of its 30 components were in the black. IBM (NYSE:IBM) led Dow gains, its share price rising 5.46% after the chip-maker reported an 8% year-over-year rise in quarterly income after yesterday’s closing bell. Coca-Cola (NYSE:KO) also made significant gains on the Dow after reporting an EPS of $1.20 on revenue of $12.7 billion, well exceeding analysts’ expectations. Other Dow winners to watch include Caterpillar (NYSE:CAT), Disney (NYSE:DIS), Microsoft (NASDAQ:MSFT), and Pfizer (NYSE:PFE).
BONUS: Apple (NASDAQ:AAPL) revenue rose 82% to $28.57 billion from the year earlier quarter! Get all the details here: Apple Inc. Earnings Cheat Sheet: Earnings Higher Than Expected.