Photo: Wikimedia Commons
WHATADAY!But first, the scoreboard:
S&P 500: -5.91
And now, the top stories:
- The easiest place to begin is yesterday, when stocks got smashed on all kinds bad news from Italy, to the debt ceiling talks breaking down, to ongoing reverberations from Friday’s jobs report miss.
- All that continued today. Asia had a rough night. The Hang Seng fell 3%. Other markets fell hard as well.
- But the party really got started when Italy opened, and the FTSE MIB instantly did a mini-crash for the second straight day. At one point it was down about 4.5%, before ultimately recovering when some big, mysterious bidder (almost certainly the ECB) came into the bond market, to push yields back down.
- Pretty much every market followed Italy’s lead. First they all got clubbed. Then as Italy came back, US equities, the rest of Europe, etc. came back. By the time the US markets officially opened, most of the action was over.
- There was one bit of economic news: The trade deficit for May came in wider than expected. Nobody cared. In fact, it’s good news, as we explained here.
- Following the start of trading, pretty much the only thing that happened was an endless volley of debt ceiling headlines, none of them encouraging. The two sides seem far apart, and are digging in. Obama dropped the Social Security card, hinting that after August 2, checks might not go out. Late in the day, McConnel floated this weird “escape hatch”/compromise idea, but nobody thinks it really has any hope. That’s a big mess.
- At 2:00 PM, markets got a bit of a lift when one line in the FOMC minutes suggested that some members were open to more QE if the economy warranted it. Gold had a huge day.
- Things were looking uppish/flattish until about 3:30, when Moody’s downgraded Ireland to junk — similar to its big junking of Portugal last week — causing things to go into risk off mode.
- Things were fairly quiet on the corporate front. News Corp initially was up on the day on news of a stock buyback, but that faded. Netflix managed to rally after announcing a new pricing scheme. The heavy days of earnings season are coming right up.
- For more on Italy, see SocGen’s 6 reasons the country has come under attack >