It was a good day to take a risk.
US stocks rally along with commodities as the dollar drops after Europeans hand Greece a deadline, which brings the risk traders out of the woodwork.
DJIA jumps 170 (1.7%) to 10269, S&P 500 rises 19 (1.8%) to 1095, Nasdaq Comp gains 31 (1.4%) to 2214. It’s the Dow’s biggest day since Nov. 8. Dollar loses 1.2% against the euro, and crude surges, which drives energy and materials stocks. Treasurys, curiously, also rise; some short-covering is cited there, after last week’s $81B bout of refunding. (Not sure I necessarily buy that, but it was curious that bonds did as well as they did today given the rallies everywhere else.)
Simon Property offers bankrupt General Growth Properties $10B; if it goes through, Simon would get control of about one-third of the nation’s mall. Two sentiment measures, the NY State Mfg index and NAHB Home Builder index, rise. But make no mistake, today’s action was driven by what’s going on in Europe, and what it did to the dollar/euro trade today.
For a day, everybody seems to have calmed down over the whole Greece issue, but be warned this is not going to go away. Markets were mollified by the month Europe’s finance ministers gave Greece to clean up its balance sheet. But it seems to us that was as much to buy the finance ministers time as the Greeks, and to allow the ministers to look tough for the home crowd. Nobody wants to offer a bailout, but in the end they may not have a choice.