Kristian Rouz — This year’s biggest sell-off on Wall Street is over, with all three major US stock indices rebounding from yesterday’s losses at the open.
The main driving force behind the equity gains is once again the news from Greece, where the leftie government of Alexis Tsipras and the indebted nation’s international creditors have seemingly reached a last-minute solution, with Tsipras having proposed a new two-year default aversion plan. Meanwhile, some US macroeconomic data, having arrived early today, had only a negligible effect to the market.
The S&P 500 added 0.19% thus far, after being 0.4% up at the open, the Dow Jones Industrial Avg rose 0.19% as well, while the Nasday Composite surged 0.29%.
With Greece being just hours away from defaulting on its debt as being unable to pay its 1.6 bln euro tranche to the IMF, the Greek PM Tsipras offered a two-year deal to be financed by the eurozone’s bailout fund. Given that certain European officials voiced support for Greece yesterday, Tsipras’ plan seems to be realistic.
This week is a holiday-shortened one for the US, and this is the main reason why such a small-time risk as Greek default has had a significant effect on the US stocks. America’s enterprises have only minor exposure to the Greek situation, however, the uncertainty stirred as the crisis unraveled and put the downward pressure on Wall Street.
The US market was propelled also by the rebound in Asia-Pacific, with mainland China’s shares rising 5.5% at the close on Tuesday after the government in Beijing undertook certain measures to reverse the 20% crash in the nation’s stocks.
US consumer confidence rose in June, as evidenced by an index by the Conference Board, surpassing forecasts of 97.3.
Separately, Chicago PMI (Purchasing Managers’ Index) added in June, but still below the threshold of 50 points, meaning there is some contraction going on. The measure has been under 50 for the fourth consecutive month.
All 10 sectors in the S&P are advancing, with financials leading the gains as Wells Fargo shares added 1%. The bull market has outnumbered the bears thus far by 2,184 to 638 bets, the upside ration standing at 3.42-to-1 on the NYSE. A similar situation in the Nasdaq occurred, with 1,882 issues advancing and 519 falling at a 3.63-to-1 positive ratio.
Global oil prices edged 1.75% higher as Greek concerns eased, with Brent benchmark selling at $63.08/bbl. Meanwhile, gold futures fell 0.85% as demand for safer assets faded.