The stock market recovered from early losses today after news leaked that the G20 is considering $600 billion in bailout loans through the International Monetary Fund in order to ease Europe’s sovereign debt issues. The Dow Jones Industrial Average (DJIA) gained 46 points, or 0.38%, by market close after dropping 70 points in the first hour of trading. The NASDAQ Composite index and S&P 500 both experienced similar activity; making up for early losses associated with European worries.
Coal producer Peabody Energy Corp. (BTU) dipped more than 3.37 percent to $36.95 by market close as a result of a downgrade by Goldman Sachs on companies that produce coal energy. Goldman Sachs Group Inc. (GS) surged late and ended the day up 3.92% at $105.13 per share.
Shares for Martha Stewart Living Omnimedia Inc. (MSO) skyrocketed Wednesday after J.C. Penney Co. released a statement saying it was buying a minority stake of 16.6% in the company in order to shore up its brand. J.C. Penney CEO Ron Johnson told reporters earlier today, “We intend for Martha Stewart stores to be a key centerpiece of our new strategy to transform J.C. Penney into America’s favorite store.”
More Action by Standard & Poor’s Ratings Agency
Standard & Poor’s ratings agency placed a handful of financial entities in the EU region on “CreditWatch Negative” for the third consecutive day, threatening the long-term AAA credit rating of BNP Paribas SA, Commerzbank AG and Deutsche Bank AG, according to an article published by Bloomberg.com. Philip Dow, director of equity strategy at Minneapolis-based RBC Wealth Management told Bloomberg via telephone on Wednesday, “It’s difficult to get a bottom line outcome on the European situation. Macro concerns are driving the market. It’s a challenging environment to manage money.”
Friday’s Summit in Brussels
A plan to alter European Union treaties in order to force countries in that region to reduce deficit spending will likely be discussed during Friday’s summit in Brussels, where German Chancellor Angela Merkel and French President Nicolas Sarkozy are expected to promote the idea of further sovereign budget cuts in the region.
Once limited to the country of Greece, the Eurozone’s sovereign debt issues have spread like wildfire in recent weeks to countries such as Italy and Spain – economies that may prove too large for a German bailout.
$600 Billion IMF Loan in the Works?
News surfaced late Wednesday that the G20 was considering a $600 billion bailout loan, via the IMF, to stem the EU crisis and restore investor confidence in the area’s sovereigns. However, the IMF later denied that report, causing markets to come off their daily highs according to CNBC.com.
Todd Schoenberger, managing director at LandColt Trading told CNBC, “We’re looking for any type of news that’s coming out of Europe. It’s a headline-driven market and this proves it right here. And with the summit coming up, we’re still thinking we’re going to get some type of good news. If the G20 is going to come with a $600 billion loan, it’s going to be wonderful for stocks.” Kevin Brungardt of RoundPoint Financial Group added, “Europe is driving this market and if they are unable to contain the contagion, then that hampers our ability to diminish the unemployment rate and diminish our ability to grow.”
European Sovereigns a Good Idea for IRA Investors?
Many feel that a $600 billion bailout by the IMF, if indeed it occurs, would provide an immediate boost to European markets and restore investor confidence in the region. Now could be an ideal time to invest in European sovereign debt depending on one’s view of whether the IMF and other central banks will take action. To find out more about IRAs, visit our rules section or go to our homepage to open an IRA.
Breaking News: Deutsche Bank CEO Receives Suspicious Package
Frankfurt police were investigating a suspicious package that was sent to the CEO of Deutsche Bank, Josef Ackermann, late Wednesday afternoon. “There was a piece of mail that arrived at Deutsche Bank that was noticed. It was noticed because it seemed unusual,” said Frankfurt Police spokesperson Alexander Kiessling at a news conference.