Download News of Greek Debt Deal Drives Markets Upward

ADV: News of Greek Debt Deal Drives Markets Upward
Laura Kuntz
Sent: Wed. 10/28/2011 4:15 PM
Positive economic news and word of an agreement by European
leaders to reduce Greek debt drove the major indices up significantly
Thursday. The plan calls for private investors and banks to take a 50%
cut in their holdings – meaning they agreed to take major losses on
Greek bonds. In addition, banks will be recapitalized, and the bailout
fund will be leveraged to 1 trillion euros.
Stocks have been rallying in anticipation of a European debt deal since
the start of October. After the deal was announced, the Dow Jones
industrial average shot up 2.9%, while the S&P 500 gained 3.4%, and
the Nasdaq surged 3.3%. Thursday’s rally pushed the S&P 500 into positive territory for the year
for the first time since early August, putting the index on track for its best monthly performance
since October 1974. The gains also pushed the Dow above the 12,000 mark for the first time
since August 1. The blue-chip index is headed for its best month since January 1987.
The eurozone’s sovereign debt woes dominated media attention for weeks, often cueing
volatile swings in the markets. But Thursday’s news prompted the VIX, an index that measures
volatility in the market, to tumble to lows generally not seen since early August. While the
highly anticipated deal sent markets skyrocketing for now, I believe investors should refrain
from getting swept up in the European euphoria as the question remains whether the deal will
be enough to contain the debt crisis over the short term. Investors around the world are
understandably looking for a more permanent solution to the region’s financial woes and
structural problems that are hindering economic growth.
In other good news, the Commerce Department said the U.S. economy's growth rate hit 2.5%
as the summer waned, more than double the rate in the first half of the year and the fastest
pace in 12 months.
Of course, I’ll keep a watchful eye on the markets on your behalf and communicate regularly
with you. If you have any questions about market events or any financial matter, please contact
me. I’m here to help.
My very best,
Laura
L A U R A A. K U N T Z , C P A / P F S , M B T
Principal & Financial Advisor
OFFICES OF LAURA KUNTZ, CPA/PFS, MBT
RAYMOND JAMES FINANCIAL SERVICES, Inc.
8009 34th Avenue South #1495, Bloomington, MN 55425 | 952-854-6250 | fax 952-854-6276
www.laurakuntz.com
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