U.S. stocks had their worst day of 2015 Monday, as investors had their first chance to react to potentially disastrous news from Greece over the weekend.
Both the Dow and S&P 500 fell into the red for the year thanks to the disastrous session.
Debt settlement talks between Greece and their European creditors broke off sharply late Friday, with Greek Prime Minister Alexis Tsipras immediately calling for a referendum this coming Sunday, in which citizens will vote whether or not to accept the ‘rescue’ package offered by creditors.
Banks and stock exchanges in Greece are closed this week in order to prevent a ‘panic’ of people rushing to secure their money. The breakdown in talks means Greece is poised to default on a 1.5 billion-Euro ($1.7 billion) payment due to the International Monetary Fund tomorrow.
Domestically, it’s a short week with Wall Street closed Friday in observance of the 4th of July holiday. Nonfarm payroll reports will be released Thursday morning, but until then it’s all eyes on Greece.
The markets spent the entire week following the news from Greece—and as the Greek government and European officials struggled to reach a deal, U.S. markets turned in a sub-par performance. As a result, the Dow stands at just +0.7% for the year, with Tuesday marking the halfway point of 2015!
Monday the market started off with a rally, as investors cheered the possibility of a solution to the Greek debt crisis. This same scenario has happened no less than 4-5 times this month… and again, those gains were cut in half as the day wore on, and no formal agreement was reached. The early rally was enough to movethe Dow up by 103 points for the day.
Tuesdaywas another day with no formal agreement on the Greece crisis, and that was reflected, as the market rally slowed. Additional data showed an uptick in new home purchases, but durable goods purchases were lower than expected. The market moved up slightly, with the Dow gaining 24 points for the day.
Wednesday started with a double dose of bad news—Greece’s prime minister, Alexis Tsipras, expressed frustration with negotiations for a bailout, while the U.S. 1st-quarter GDP was finalized at -0.2%. The markets dropped early and never recovered. The Dow registered its worst day in June, dropping 180 points.
Thursday those struggles continued, with no Greek resolution in sight. In the words of one expert, the markets were being “held hostage” until there is a resolution. In the meantime, investors’ concerns continued as the Dow dropped another 75 points.
Friday stocks jumped on a positive consumer sentiment reading that exceeded expectations. But due to the continued lack of a settlement in Greece, the rally was less than what would normally be seen off positive data. By the end of the day, the Dow had gained 56 points.
U.S. stocks were lower on Thursday, as the market continued to followed ongoing debt negotiations between Greece and other European powers.
One market analyst said the market was ‘held hostage’ until the negotiations were completed with a resolution one way or another. Meetings are ongoing in Brussels throughout the day, with both sides hopeful of reaching a settlement before Tuesday’s deadline.
A missed payment to the International Monetary Fund would hasten the threat of Greece exiting the Euro Zone altogether.
Healthcare stocks jumped on Thursday morning after the Supreme Court ruled in favor of federal subsidies that help over 6 million people pay for Obamacare health plans under the Affordable Care Act.
Here are the final numbers from Thursday on Wall Street:
U.S. stocks tumbled Wednesday, as the continued inability of Greece and its creditors to reach a settlement frustrated investors.
Greece Prime Minister Alexis Tsipras expressed anger at the slow-developing plans ahead of today’s meeting with Euro Zone officials in Brussels. As the deadline—now a mere five days away—approaches, the possibility of a Greek exit from the Euro Zone is being increasingly bantered about on Wall Street.
Domestically, 1st-quarter GDP numbers became official this morning at -0.2%. Investor reactions were muted—as the preliminary numbers already suggested a downturn—but speculation abounded as to the degree of recovery we would see in the second quarter.
Here are the final numbers from Wednesday on Wall Street:
U.S. stocks moved slightly higher on Tuesday, as investors continued to wait for confirmation of a deal to keep Greece from going into default.
The Greek government presented new reform proposals Monday in hopes of avoiding—or at least staving off—a disastrous situation that could result from a missed payment to the international Monetary Fund one week from today (June 30).
Back in the United States, data continued to show strong numbers in the housing market, but slow recovery from a first-quarter downturn in other areas. Durable goods data showed a decline of 1.8 percent for May—a larger drop than expected.
Here are the final numbers from Tuesday on Wall Street:
U.S. stocks were higher on Monday, following European and global markets encouraged by the possibility of a last-minute solution to the Greek debt crisis.
With talks scheduled for today in Brussels, investors turned an eye towards new offers made over the weekend by Greek Prime Minister Alexis Tsipras in order to avoid defaulting on next week’s 1.5 billion Euro payment to the International Monetary Fund.
Shares in European—Greek in particular—banks soared Monday, but the Euro stayed flat against the dollar.
Back home in the states, investors followed an existing home sales report that met expectations. This week, the final 1st-quarter GDP number and consumer sentiment figures will be the biggest piece to the data puzzle.
Here are the final numbers from Monday on Wall Street:
It was the best week for the markets since more than a month, and they needed some good news. Even after this week’s rally, the Dow is up just over 1% for the year as we close in on the halfway point of 2015.
Monday markets reacted negatively to the breakdown of bailout talks in Greece. European officials said that the Greek government’s refusal to compromise squashed the talks. Domestically, United Technologies announced major changes to its aircraft division, including some unexpected layoffs. It was a rough start to the week, as the Dow dropped 107 points.
Tuesday investors turned a blind eye to the Greek crisis, choosing instead to focus on the following day’s Federal Reserve statement. Despite no news from Europe or the Fed on Tuesday, the Dow essentially reversed the previous day’s losses, gaining 113 points.
Wednesday the markets stayed relatively even for much of the day, awaiting the 2pm Federal Reserve statement—which eventually came and went with no new news. Fed Chair Janet Yellen did comment that “just about every member” of the committee is prepared for an interest rate hike in 2015. But the market’s reaction was muted, as the Dow went up just 31 points.
Thursday investors began to react in a serious manner to the latest Federal Reserve press conference. With the expected rate hike still a couple months off, the market bounced back. Inflation data showed the biggest Consumer Price Index increase in 2.5 years! But for the day, the Dow was up 180 points.
Friday Wall Street returned its focus to the Greece crisis, as the June 30 deadline grew closer. The European Central bank issues a report that on average, over 1 billion euros per days were withdrawn from Greek banks this week. Ahead of Greece’s Monday “do-or-die” summit meeting with European leaders, the Dow went down 101 points.
U.S. stocks were higher Thursday, as investors moved on from the Federal Reserve’s statement to eye inflation data.
The Federal Reserve not only avoided raising interest rates, they offered little in the way of hints as to the eventual timing of such a hike, although Fed Chair Janet Yellen did admit that most committee members foresee a rate hike in the future at some point this year.
The Consumer Price Index (CPI) rose 0.4 percent in May–the largest increase in over two years. This put the year-over-year pace at 1.8 percent, with core inflation at 1.7 percent—just below the Federal Reserve’s target of 2 percent.
Meanwhile Europe was under pressure Thursday, as Greek stocks plunged to a new three-year low.
Here are the final numbers from Thursday on Wall Street:
Despite widespread support for a measure that would force brokers to put their clients’ best interests first when managing retirement accounts, it appears that the powers on Wall Street are poised to get their way once again.
The House Appropriations Committee introduced a bill on Tuesday that would effectively stop the Department of Labor’s (DOL) fiduciary standard proposal.
The condition is part of a $153 billion dollar plan that would fund the Department of Labor, the Department of Health and Human Services and many other government agencies for fiscal year 2016.
Under this new law, DOL would be forbidden to spend any funds in order to revise, finalize or ultimately implement the fiduciary rule. Experts on Capitol Hill believe the House Appropriations subcommittee will approve this suggestion on Wednesday, which would send it to the full House of Representatives for further action.
The measure comes one day before Department of Labor Secretary Thomas Perez was set to testify before the House Committee on Education and the Workforce about proposed amendments to the rule.
Predictably, proponents of the rule are disgusted by this latest development. Dennis Kelleher is the President and CEO of Better Markets. Kelleher is set to testify alongside Perez later today.
“This new bill would put Wall Street brokers’ interests above the best interests of hardworking Americans who are just trying to save for retirement,” he lamented. “Legislation to stop the proposed DOL rule from protecting retirement savers turns the law upside down and protects brokers’ bonuses. That’s just wrong.”
Wall Street-based critics say the fiduciary rule would expose brokers to significant risks of liability, while forcing them to abandon investors with ‘modest’ retirement accounts.
“The legislation includes several provisions designed to help U.S. businesses create jobs and grow the economy by reducing or eliminating overly burdensome government regulations,” the House Committee said in its bill summary.
As disappointed as they are, supporters of the DOL’s bill don’t seem surprised by the latest tactics of lawmakers and brokers to avoid the fiduciary standard at all costs.
“The only reason to defund the DOL’s effort is if you’re prioritizing the concerns of financial firms over the very real struggles of American workers and retirees,” said Barbara Roper, director of investor protection at the Consumer Federation of America and a well-known advocate for fiduciary responsibility across the industry.
It is believed that the House will approve the bill, but experts believe it could face some opposition in the Senate. The House committee, however, is prepared for such delays and has already suggested attaching the anti-fiduciary provision to alternate legislation.
“If this rider is on a bill the president is forced to sign—that’s a real threat,” summarized Roper.
This past May, I spoke with Barbara Roper on the Crash Proof Retirement Show. We discussed how the financial services industry designs products to specifically benefit themselves and not the consumer.
There are steps you can take to force a fiduciary responsibility on your advisor. Here’s more from our exclusive interview with Barbara Roper.
U.S. stocks were higher Wednesday, as the attention of Wall Street shifted from the Greece crisis to the Federal Reserve statement.
With no solution imminent in Greece, it made sense for investors to choose to follow the policymakers, in hopes of finding further clues to the timing of an interest rate hike. However, the Fed statement came and went with no rate hike this time around, and little discussion of when such a occurrence might be realistic. The central bank did revise its’ annual GDP expectations to 1.8-2%.
Some investors are beginning to believe the Fed may wait until December for that first rate hike—but compensate by making it a larger initial increase. But little, if any, of that speculation received clarification on Wednesday.
Here are the final numbers from Wednesday on Wall Street:
