Wall Street is extending yesterday’s rally and on pace to end a week of volatile momentum swings with some modest gains. Financial stocks like Bank of America (BAC) and Citigroup (C) have been spearheading the week’s violent swings, serving as the biggest decliners on down days and biggest gainers on rally days. The week saw quite a few major economic developments, sparked by Wall Street’s reaction to Standard and Poor’s downgrade of the U.S. credit rating from AAA to AA+, as well as the Federal Reserve stating that interest rates will remain unchanged until at least 2013. A recent survey also showed that consumer sentiment in early August is at the lowest level since May 1980. Contrasting that is the jump in retail sales for the month of July, which helped to push retail stocks higher. However, with the seemingly deteriorating economic landscape–high unemployment, loss of confidence in U.S. credit, bi-polar stock market, gridlock in Washington–in just the first two weeks of August, consumer spending may see a steep drop this month. Oil prices have recovered some ground, perhaps signaling economic activity may not decline as much as energy speculators had expected. Precious metals have also experienced a significant pullback, with gold dropping back down to about $1,740 an ounce.
Major U.S. Stock Indices
DJIA: 11,281.17 (+1.19 percent)
S&P 500: 1,182.25 (+0.82 percent)
NASDAQ: 2,511.64 (+0.76 percent)
Russell 2000: 700.70 (+0.69 percent)
In other news:
- Has the market finally bottomed? Technical experts say probably not, but there could be some short-term upside left. [Marketwatch]
- Inflated home appraisals were a major driver in the housing bubble, and now undervalued appraisals could be holding the market back from recovery. [WSJ]
- France, Spain, Italy and Belgium have banned short-selling of their bank stocks, probably because it worked so well when the U.S. tried it during the financial crisis. [Bloomberg]
- The Securities and Exchange Commission is looking into the S&P’s downgrade of U.S. debt to see if any insider trading or foul play took place. [CNBC]
- Does the dissension among Federal Reserve officials indicate that the U.S. central bank’s strategy of easy money and stimulus is not working? [Reuters]
Check back as more news develops.