Stocks rallied hard on Friday after markets saw the latest Greek proposal as an encouraging sign that a deal will be reached this weekend keeping Greece in the euro and getting the country the funding it needs to re-open banks and its stock market, among other things.
First, the scoreboard:
- Dow: 17,760, +210, (+1.3%)
- S&P 500: 2,078, +27, (+1.3%+
- Nasdaq: 5,002, +80, (+1.6%)
And now, the top stories on Friday:
1. It was all about Greece on Friday. On Thursday, Greece submitted an updated bailout proposal to its European creditors ahead of a deadline this weekend. The Eurogroup finance ministers are set to meet to discuss the plan on Saturday while a European Union-wide summit is scheduled for Sunday. The plan was, more or less, the same thing that Greece had been offered two weeks ago when it walked away from negotiations with its European creditors and called a surprise referendum. The market took this as a good sign for the potential of a Greek deal. Seen another way, the last 6 months — and particularly the last 2 weeks — were a big waste of time for Greece.
2. Meanwhile, Greece is facing a shortage of funding in its banking system, which has been frozen for nearly 2 weeks while capital controls have been in place over the same period. A report from Reuters on Friday, citing a senior Greek banker, said that Greek banks will be 10 to 14 billion euros of fresh capital to keep then afloat, even if a deal is reached this weekend.
3. We heard from Federal Reserve chair Janet Yellen on Friday for the first time since the June FOMC meeting. In a speech in Cleveland, Yellen reiterated her expectation that later this year it will be appropriate for the Federal Reserve to raise interest rates for the first time since July 2006. Regarding the situation in Greece, Yellen said only that it remains “unresolved.”
4. The number of oil rigs in use in the US rose again this week by 5 to 645. This was the second straight week that the number of rigs in use rose. Ahead of the report, we highlighted commentary from Morgan Stanley from back in April that shows that, well, they nailed it. Twelve weeks ago, the firm wrote that they expected the drop in oil rig counts — which was greater than 65% when all was said and done — would stop in 12 weeks’ time.