It was an up day, but if you’re bullish, a very deflating one, as stocks came way off earlier highs

But first, the scoreboard:

Dow: +48.84
NASDAQ: +15.37
S&P 500: +4.44

And now, the top stories:

  • It all started out last night pretty promising. China reported retail sales and GDP growth that was higher than expected, and that fuelled hopes of the the much-hoped-for “soft landing.” Stocks rallied in Asia, and that continued into Europe.
  • Italy Week hasn’t exactly materialised as some might have expected. That mini panic was over by Tuesday morning, and since then things on the boot have been fairly quiet. Europe gets a brief break from crisis, that will almost certainly be back before too long.
  • In the US, there was (once again) basically no new economic news. The big event was Bernanke speaking at his Humphrey-Hawkins testimony in front of Congress. The big news from that: If the economy does weaken considerably, and deflation re-emerges, the Fed would consider acting.
  • Suddenly, all the talk was about QE3, and everything surged. It should be noted that gold hit new highs early in the day, but everything went into overdrive once Bernanke’s testimony was released. Gold, silver, oil, stocks, etc. Treasuries initially surged, but then sold off when people realised that although QE3 would likely mean bond buying, a Treasury rally isn’t consistent with RISK ON. Click here to see some interesting comments that Bernanke made about gold >
  • But then it all faded away. Fed Governor Fisher came out with a speech saying he wouldn’t support more action. John Boehner called hitting the August 2 deadline a “crapshoot.” Treasuries went nuts, with huge gains by the end of the day.
  • One interesting bit of corporate news: Late in the day WSJ reported that Amazon would introduce an iPad competitor late in the day. Also amusing: A day after announcing a new plans that everyone seems to hate, Netflix surged to more. Also: News Corp. dropped its bid for BSkyB
  • For some illumination, check out the latest slide presentation from bond manager Jeff Gundlach >

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