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A 2% gain for the NASDAQ!First, the scoreboard:
S&P 500: +12.22
And now, the top stories:
- The big “risk on” rally started yesterday afternoon when the Bank for International Settlements announced the new Basel bank leverage rules, prompting a big sigh of relief among bank investors. Basically, the leverage ratios aren’t that brutal, and the banks have plenty of time to comply. The euro took off yesterday evening on the news (and when European markets opened, bank shares surged).
- Rallies across the board soon followed in Asia and in Europe. As noted above, European banks staged a big rally, which makes sense given the ongoing concerns about their health. A benign Basel ruling is at least on reason to cheer them.
- The rally continued into the US and basically held strong all day. Tech was very strong early on, and banks like Goldman Sachs (GS), Citigroup (C), and Bank of America (BAC). There was a bit of a mid-day swoon, and not everything screamed risk-on. For example, the yen rallied again to near highs, and even US Treasuries caught a bid, reversing last week’s selloff.
- Right near the end of the day, Microsoft announced that it would take on debt to buy back shares, causing the stock to spike, which in turn caused the NASDAQ and the Dow to spike.
- As for macro news, there really wasn’t a whole lot. There were a lot of political headlines — more manoeuvring on the tax cuts issue — which is probably what you can expect from now until November.
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