Greece’s austerity deal lifts Wall St
US stocks closed way off session lows yesterday on news Greece agreed to a five-year austerity plan, but lingering economic uncertainty ultimately drove indexes mostly lower, keeping a downward trend in place.
The Nasdaq wiped out all its losses, ending the session higher and back in the black for the year.
The news out of Greece set the stage for a resolution to Athens’ credit problems, which have hurt investor sentiment around the globe.
“Shorts will unwind some positions, but this isn’t the whole story,” said Rich Ilczyszyn, market strategist with Lind Waldock in Chicago.
The question now remains whether the late-day surge is a precursor to renewed buying interest or if it was just an interruption before selling returns in coming days.
The Dow Jones industrial average dropped 59.67 points, or 0.49 per cent, to 12,050.00 at the close. The Standard & Poor’s 500 Index lost 3.64 points, or 0.28 per cent, to 1,283.50. But the Nasdaq Composite Index gained 17.56 points, or 0.66 per cent, to 2,686.75.
Earlier in the day, markets had sold off as oil’s slide to a four-month low triggered declines in a fragile market after Federal Reserve chairman Ben Bernanke’s comments about a slowing economic recovery a day earlier.
U.S. August crude oil futures settled at $91.02 a barrel, down $4.39, after the International Energy Agency said it will release 60m barrels of oil from strategic stockpiles.
The slide in the price of oil was exacerbated by a 0.7 per cent climb in the US Dollar Index, which tracks the greenback’s performance against a basket of major currencies. In times of stress, the flight to safety that pushes the dollar higher makes oil more expensive, further sapping demand for crude and other commodities priced in dollars.
Giving some support to the market, tumbling oil prices lifted an index of airlines’ stocks by 2.4 per cent.
Bets that lower prices at the pump will open consumer’s wallets boosted the S&P retail sector index by 1.4 per cent.
About 8.2bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, above the average so far this year of 7.57bn. Volume got a late boost after the Greece headlines. Declining stocks outnumbered advancing ones on the NYSE by a ratio of more than four to three. On the Nasdaq, the opposite trend prevailed.