Photo: Air Force
For the third straight day, stocks started lower in the pre-market and then rallied sharply as the day wore on. The close was a bit weak, however, so that may raise some eyebrows.But first, the scoreboard:
S&P 500: +16.37
And now, the top stories:
- As we said above, today was the third straight day of selling in the early going. Once again, all the skittishness emanated out of Europe. The dreaded Moody’s downgrade that everyone was expecting for French banks finally came. The usual suspects — BNP Paribas and SocGen — both fell. News that the ECB had lent $575 million to two European banks also caused jitters. Both of the aforementioned banks came out and denied that they were the recipients of the emergency cash.
- Conversely, one thing that helped the Euro early on was a comment from Sarkozy about doing everything possible to save Greece, the latest signal that the country wouldn’t yet be thrown to the wolves.
- Also in the pre-market, Tim Geithner did an interview on CNBC where he said there would definitely be no “Lehmans” in Europe. Jim Cramer who conducted the interview thought this was a fairly big statement. We’re not so sure, though.
- In the US at 8:30 there was some mediocre in the form of of August retail sales, which came in solidly below expectations, meaning Q3 GDP estimates will have to come down. The market didn’t respond too strong, however.
- What the market DID react to was a headline, just before 10:00 AM ET that Austria had rejected an expansion to the EFSF (bailout program), which would be necessary for the second bailout of Greece to happen. But it turned out the headline was wrong! The real news was that the vote wouldn’t be fast-tracked, and markets quickly staunched the bleeding.
- Eventually, the market began its big move into the green.
- Later in the afternoon, there was the big conference call between Greece’s Papandreou, Germany’s Merkel, and France’s Sarkozy. When they came out and said they were all committed to the bailout path — which was always going to be the obvious outcome of the call — stocks surged even more.
- One interesting story of the day: There had been tons of hype about a big new investment from Bill Ackman, and everyone wondered what tiny stock he’d bought and pumped. Turns out it’s not a stock bet at all. He’s long calls on the Hong Kong dollar. More on that here >
- The big negative aspect of the day was that huge gains of around 270 on the Dow around 3:30 couldn’t be held, with the market giving up over 100 points. Still, big up day.
- Meanwhile, on the sovereign debt front, here are the countries most likely to default >
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