EmailThere is nothing that can be considered bullish news from Europe today, so the bearish news on Spain is forefront. Futures indicate a down open of 8 points, which would erase about half of yesterday's 14 point bounce in the S&P 500 index.
The European Central Bank said it has not approved a bailout of Spanish bank Bankia using ECB credit facilities. A small rating agency downgraded Spanish debt. Yields on the Spanish 10-year note rose to 6.65%. (For unquantifiable reasons, the market has decided that a 7% yield on that note is "unsustainable" and the point at which market panic, or something close, is logical.)
None of the news is good. European stocks are down about one-half to one percent.
The bottom line is that the mess in Europe remains a mess. There is no consensus across countries on how to address the credit crisis and the political institutions to deal with EU matters are still feeling their way. This won't be easy. There will be starts and stops, and headlines out of Europe that drive US stocks both directions.
The news from the US is limited and taking a far back seat to Europe. Pending home sales data will be out at 10:00 ET. There is no corporate news of note.
US data will move back to center stage on Friday with the release of May employment data. A solid increase of 150,000 or a bit more is likely.
On many days the US stock market has been constrained by fears of European headlines until those markets close. Afterwards, the US market has sometimes done better in the remaining trading hours. But then the market is subject the following morning to whatever news comes out of Europe. Short-term bets are therefore risky, even as US stocks reflect excellent value.
Commodity prices continue to drop on concerns about global economic growth. Oil is down $1.35 to $89.41 a barrel. Gold is below $1550 an ounce, down from $1900 last summer. Facebook is indicated to open lower, but for entirely different reasons. The euro is also down, now sporting the numbers 1.24 to start. It was just a few days ago that 1.26 was considered a key support level.
The good news is that the S&P 500 index is holding its gains from last week. Even a down day today might leave this week net up with just two days to go. The charts look a little better. We'll just have to see how the headlines from Europe look on Thursday and Friday.
Founder and Chairman, Briefing.com
