Stocks shrug off European election results

In what may have been a case of “sell the rumor, buy the news,” stocks mostly rose the day after anti-austerity candidate François Hollande was elected president of France and anti-bailout parties won seats in the Greek parliament. French stocks, which lost 3% last week, rebounded 1.7% on Monday following the defeat of Nicholas Sarkozy by Hollande, the first Socialist to win election as president in 17 years. The Stoxx Europe 600, which fell more than 2% last week in anticipation of Sunday’s electoral results, gained 0.8% today, with Spanish and Italian stocks jumping more than 2.5%.

Even the German DAX index, which had opened sharply lower this morning, finished the day with a 0.1% gain. German stocks may have gotten a boost from a report showing factory orders jumped 2.2% in March, well above the 0.5% increase analysts were expecting. German bunds, which had been higher earlier in the session, were unchanged to down slightly in price on the day. Greek stocks, however, got a drubbing, losing nearly 7% on Monday. The euro, which had fallen as low as $1.2955 early in the session, ended late at $1.3050, down only 0.25% on the day, its sixth straight down day.

U.S. stocks opened lower but spent the day mostly climbing higher before losing steam in the last hour of trading. Both the S&P 500 and the NASDAQ Composite managed to hang onto fractional gains, while the Dow fell into negative territory, ending the day with a 0.2% loss. Financial stocks were among the best performers, with the KBW bank index gaining almost 1.0%. U.S. Treasury bond prices were mostly unchanged on the day after trading higher earlier. Oil prices remained weak, albeit off the session’s lows, with Nymex crude futures falling 0.5% to $98 a barrel.

The Federal Reserve reported that consumer credit increased by $21 billion in March, more than double the $10 billion analysts were expecting and the $9 billion gain of the previous month. The gain was the biggest monthly increase since 2001. Nonrevolving credit, which mostly includes auto and student loans, rose by an annual rate of more than 11%, while revolving credit, which mostly includes credit card loans, was little changed, the Fed said.

Reports/dates/facts/links worth paying attention to over the next week:

  1. May 8: ICSC-Goldman same store sales.
  2. May 9: Energy Information Administration weekly petroleum status report.
  3. May 10: Weekly unemployment claims.
  4. May 11: Producer price index for April; University of Michigan consumer sentiment for May.

Copyright © 2012 by Wright Investors’ Service, Inc. The views expressed in this blog reflect those of Wright Investors’ Service, Inc. and are subject to change. Statements and opinions therein are based on sources of information believed to be accurate and reliable, but Wright Investors’ Service, Inc. makes no representations or guarantees as to the accuracy or completeness thereof. These views should not be relied upon as investment advice.

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