The Greek Parliament’s vote to accept austerity measures as a condition for another bailout helped the American stock market regain most of the losses sustained on Friday. Needless to say, Friday’s bearishness resulted from concern about whether credit default swaps would be triggered by an “involuntary” debt default by Greece. Monday’s trading turned things around.
Miami-based companies were a different story altogether on Monday -- with the cruise lines’ taking significant hits, while Ryder System (R) and Lennar (LEN) made big gains. Lennar hit a 52-week high on Monday, having picked up a good deal of momentum after 2:00.
Stephen Castle’s article in Monday’s New York Times discussed the reaction of European officials to the Greek Parliament’s vote to accept austerity measures in exchange for another bailout:
Officials cautioned that any agreement would be a conditional one, pointing out that the German Parliament, which must approve the deal, will not vote on it until Feb. 27.
Not all of the conditions demanded of the Greeks have been satisfied, including a determination by the government of 325 million euros in additional savings. Another is a guarantee of support for the bailout from Greece’s political chiefs, including Antonis Samaras, leader of the conservative New Democracy party, which is expected to win elections that are expected soon.
Mr. Samaras sowed doubt on Sunday in Parliament about his commitment to the agreement, despite calling on deputies to vote for it.
Despite repeated claims of a “done deal”, the drama in Greece will continue. It is also noteworthy that the afternoon update to Stephen Castle’s article led off with the debt downgrades issued to six European nations by Moody’s Investors Service:
Moody’s downgraded Spain to A3 from A1 with a negative outlook; Italy to A3 from A2 with a negative outlook; and Portugal to Ba3 from Ba2 with a negative outlook. The agency also lowered the ratings for Malta, Slovakia and Slovenia.
Moody’s revised to negative its outlook on Britain, France and Austria, which have the agency’s top Aaa rating.
It will be interesting to see how those debt downgrades affect the American stock market on Tuesday.
The Dow Jones Industrial Average picked up 72 points on Monday, to close at 12,874 for a gain of 57 basis points (0.57 percent). The S&P 500 regained 68 basis points (0.68 percent) to finish at 1,351 – exactly where it closed on Thursday. The NASDAQ Composite advanced by 95 basis points (0.95 percent) to end the day at 2,931.
Miami-based corporations had a mixed day on Monday. Lennar (LEN) led the group with a gain of 2.61% to close at 23.96. Ryder System (R) was next, climbing by 1.95% to finish at 54.85. Royal Caribbean (RCL) declined by 71 basis points (0.71%) to close at 30.65. Carnival Cruise Lines (CCL) sank by 1.67% to end the day at 30.53.
The following companies will be playing “beat the number” on Tuesday, with the release of their quarterly earnings reports: ACI Worldwide (ACIW), Avon Products (AVP), Bob Evans Farms (BOBE), BorgWarner (BWA), FMC Technologies (FTI), Fossil (FOSL), Goodyear Tire (GT), LCA Vision (LCAV), Marsh and McLennan (MMC), Metlife (MET), Powerwave Technologies (PWAV), Quest Software (QSFT), Questar (STR), Sapient Corp (SAPE), Stepan Chemical (SCO), Valspar (VAL) and Weight Watchers International (WTW). Good luck!
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