Euro zone euphoria spilled over onto Wall Street yet again, carrying stocks higher to close out the trading session in bright green territory. Tech stocks led the way higher with the NASDAQ clinching a 1.20% gain on the day, while the Dow Jones Industrial Average lagged behind, inching higher by just 0.84% for the day. Oil prices climbed alongside equity markets and futures prices for the energy commodity closed right around $97 a barrel. Gold also went along for the ride, as futures prices for the precious yellow metal climbed to a fresh multi-week high of $1,804 an ounce, only to tumble back down to $1,790 an ounce as the closing bell rang on Wall Street.
On the home front, justice was brought to Rajaratnam who was charged with running a massive insider trading scheme back in October of 2009. A federal judge ordered Raj Rajaratnam to pay a penalty of $93 million, making this the largest penalty ever assessed by the Securities and Exchange commission for insider trading. Yahoo, Microsoft, and AOL unveiled a proposed advertising agreement, which aims to integrate each of the companies real-time bidding technologies to achieve benefits of scale and efficiency.
One of the biggest winners on the day was the Vanguard European ETF (VGK), bolstered by news of Italian Prime Minister Berlusconi resigning, gaining 1.99% on the day. President Giorgio Napolitano said Berlusconi has agreed to quit after the parliament approves the country’s austerity plans next week. The markets cheered news of Berlusconi leaving, boosting optimism that Italy will appoint a new leader who will be better able to tame the nation’s towering deficit [see Three Long/Short Ideas For Euro Zone Debt Drama]. Michael Holland, chairman and founder of New York-based Holland & Co., said in a telephone interview, “There’s a handful of adults in Europe who are working very hard. The market has a clear view that Berlusconi is not helpful with what Europe needs moving into the future. He is part of the problem, not the solution”.
While equity markets soared, the S&P 500 VIX Short-Term Futures ETN (VXX) plunged, posting one of the worst performances on the day and slipping lower by 4.67%. The VIX, commonly referred to as the “Fear Index”, tumbled lowered as investors’ confidence regarding the Euro zone debt drama improved considerably following a cheerful reaction from overseas on news of Berslusconi resigning. Investors will now look to European leaders to take the next steps in devising a comprehensive plan to ensure stability in the debt burdened currency bloc [see also Ten Best ETF Performers Over The Last Five Years].
Disclosure: No positions at time of writing.