Markets are soaring a day after Spain announced that it was effectively shut out of capital markets, despite European Central Bank President Mario Draghi indicating that additional monetary policy was not forthcoming. A more tightly integrated banking union between the eurozone members is in the works, but nothing would take effect before 2014, arriving just in time to pick up the pieces from a fiscal crisis. It's years late and a few drachma short, it seems. Still, beaten-down companies at the heart of the crisis like indebted Greek shipper DryShips (NAS: DRYS) and Spanish financial institution Banco Santandar (NYS: STD) are seeing healthy 3% gains.
If anything, today's optimism is pre-empting Federal Reserve Chairman Ben Bernanke's appearance tomorrow before Congress. With the hopes of sustained recovery dimming, a new round of quantitative easing or extending Operation Twist may be in the works.
Let's take a closer look at the three major indexes and drill down on a few stocks soaring above the rest of the market.
Dow Jones Industrial Average (INDEX: ^DJI)
Source: Yahoo! Finance.
All three major indexes are up nearly 2% as of this writing, and the Nasdaq's first-place performance isn't surprising, as the tech sector's 2.5% gain leads the rest of the market. All 30 Dow components are green as the index is back in positive territory for the year, with Bank of America's (NYS: BAC) 6% increase leading the charge today. Additional federal reserve action would directly benefit the too-big-to-fail Wall Street firms the most, as would a rate cut in Europe, an idea that made it into recent ECB discussions before getting shot down by central bankers.
Unsurprisingly, the Direxion Daily Financial Bull 3X Shares (NYS: FAS) ETF is up 6.5%.That said, determining if today's gain is a change in sentiment or simply short covering before a potentially big announcement from Bernanke remains to be seen.
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