Today was all about stress tests, stress tests, and stress tests.
But first, the scoreboard:
S&P 500: 8.8
And now, the day’s top stories
- Stress test rumours got started very early on, when reports emerged that Spanish banks were the most likely to fail. Astute observers recognised that this was probably good news, a signal of some modest strenuousness to the tests.
- Right before the US market opening bell, there was wild volatility after a wave of thought that perhaps the stress tests would be a joke. The euro plummeted. Stocks were dragged down too.
- It was all silent until noon, when the stress tests hit, and that’s when things went nuts. First the euro shot the moon. Then it plummeted. Then it rallied again. In the end, 7 of the 91 banks failed, a number that was lower than anyone expected. And the total system-wide capital shortfall was a pittance, just over 3 billion euros.
- But in the end, there was little punishment for the weakness of the stress tests, if in fact there was any. US stocks rallied, as did the euro.
- This was the second up day in a row since the big Bernanke-inspired decline on Wednesday. The bulls aren’t in charge any means, but obviously the going has gotten much tougher for the bears than it was a few weeks ago.