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On Tuesday, pros were starting to wonder if stocks had more upside, largely because the economic outlook had grown darker.That may sound counter-intuitive but it's very much behind Tuesday's rally in the S&P and Dow.
Looking at the latest data from overseas, and you’d be hard pressed to find any reason for optimism.In Germany , investor morale sank in June at its fastest rate since October 1998. And in Spain , yields on Spanish bonds remained stubbornly high. Madrid had to pay 5.07 percent to sell 12-month Treasury bills and 5.11 percent to sell 18-month paper - an increase of about 200 basis points on the last auction for the same maturities a month ago. Meanwhile, yields on longer-term bonds were over 7 percent, a level largely considered unsustainable.And in the US, the housing market again confounded investors.
The Commerce Department said on Tuesday that groundbreaking on new homes dropped 4.8 percent to a seasonally adjusted annual rate of 708,000 units. The reading, which is prone to significant revisions, was below the median forecast in a Reuters poll of a 720,000-unit rate.
All told, the confluence of negative developments sound like a good reason for stocks to sell-off, but they may actually be quite bullish.
Huh?
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