Mixed Euro News Stalls Rally Ahead of Eventful Week
January 23, 2012
Stocks finished slightly lower on Monday. Major indices opened the session gaining as optimism increased surrounding the Greek debt swap negotiations.
Rumors that the parties were converging on a deal under which private bondholders would take a 65-70% haircut on their Greek bonds led stocks to gain early on. However, this sentiment would not last as Reuters published a report stating that Greece aimed to submit an official offer by February 13, which means the parities could potentially drag the negotiations out for several additional weeks.
Stocks did not react well to the news, paring intraday gains and pushing major indices into negative territory. Profit-taking during the move was also likely as the current market continues to be extremely overbought in the short-term.
The bears looked like they had this session all to themselves for the majority of the morning until an article from the Financial Times surfaced which said that German Chancellor Merkel may be prepared to let the EFSF run side-by-side with the ESM, effectively increasing the bailout firepower to €750B.
The bulls controlled the rest of way, pulling major indices back towards break-even territory. The S&P 500 finished in the green, though other major indices were slightly negative.
Though Monday’s intraday action was relatively eventful, it should be noted that this session was another wash, price-wise, as stocks finished nearly unchanged from Friday’s close. This stall is likely due to the major events this weekend, which include a Fed meeting on Tuesday and Wednesday, continuing debt swap talks in Greece, and US GDP on Friday.
Close Recap: S&P 500 +0.05%, NASDAQ -0.09%, DJIA -0.09%, Midcaps -0.04%.
Have a pleasant evening.
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