Wall Street is trading higher again today, building on two straight days of gains after Greece’s parliament passed a $40 billion austerity package, meaning the debt-strapped economy is on pace to receive a $17 billion tranche from its European Union/International Monetary Fund bailout. Without the next installment, Greece could go into default and potentially trigger a global financial crisis similar to that of the Lehman Bros. collapse a few years ago. Though the situation is far from resolved, investors are slightly relieved as they focus their attention on the immediate economic concerns in the U.S. debt ceiling.The IMF said today that if Congress fails to raise the government’s borrowing cap, the results could strike a “severe shock” to the global economy’s shaky recovery effort. The U.S. Treasury has already reached the $14.3 trillion lending limit, and would need to raise the cap by August in order to avoid defaulting on its debt. The IMF also said that it will downgrade the U.S.’s AAA debt rating if Congress fails to raise the ceiling. In commodities, oil prices jumped to over $95 a barrel as a report showed supplies declined faster than expected. Gold and silver prices are trading higher as investors are seemingly bearish on the prospects of U.S. debt ceiling discussions.
Major U.S. Stock Indices
DJIA: 12,273.00 (+0.69 percent)
S&P 500: 1,308.03 (+0.88 percent)
NASDAQ: 2,743.94 (+0.54 percent)
Russell 2000: 821.35 (+0.49 percent)
In other news:
- The U.S. wars in Afghanistan and Iraq will cost the economy $4 trillion, and more importantly, over 225,000 lives, according to a new study. [Yahoo! News]
- Bank of America (BAC) is setting aside $14 billion to pay investors who bought mortgage backed securities from the bank. The toxic mortgages are mostly coming from the Countrywide Financial acquisition, and is expected to cause a Q2 loss of $8.6 billion to $9.1 billion for Bank of America. [NY Times]
- The terms “high-speed rail” and “speed bumps” should never go together. [WSJ]
- Where have investors heard this before: “Why bullish? First and foremost prices are low—in several cases irreplaceable franchises are trading below tangible book, e.g. Bank of America (BAC), Citigroup (C) and Morgan Stanley (MS).” [CNBC]
- The 10 worst stocks in 2011. [Fortune]
Check back for more news.