The Nasdaq (INDEX: ^IXIC ) surged a whopping 3% in today’s trading, it’s largest gain of the year. That gain significantly outpaced the S&P 500’s (INDEX: ^GSPC ) gain of 2.49%, and the Dow Jones’ (INDEX: ^DJI ) 2.2% jump. Those heady gains came after Germany’s DAX index soared 4.33%. Optimism even spread to oil, where U.S. crude futures rose throughout the day and were up over 9% at 4 PM EDT.
The reason for all the optimism? Encouraging signs out of Europe. Yesterday, I wrote about how the Germans were becoming more open to a tighter fiscal union across the continent, which would provide relief to embattled countries like Italy and Spain. However, the concern was whether Germany would soften its stance enough that Italy and Spain would agree to any proposals put forth by the Germans, who have fought for more fiscal austerity since the eurozone crisis began.
Well, it looks as though the Germans blinked. As a result of actions at today’s EU Summit meeting, there will be a euro-wide banking supervisor. In addition, bailouts to banks can now come directly from the central European banking supervisor. This provides relief for countries like Spain, which no longer have to borrow money for their banking system, because the banks can now go directly to the European Central Bank.
In response, yields on Spanish and Italian bonds plummeted today. That temporarily breaks the cycle of rising debt payments that was crushing Spain’s efforts to “right its ship.”
Remember, though, that today's market euphoria doesn't necessarily mean that Europe’s woes are fixed. Consider this a step in the right direction. Yet, with many members of the eurozone still facing deficits and slow growth for years to come, this is likely the first of many proposals aimed at strengthening euro integration.
Stocks Seeing Losses Today
In spite of positivity out of Europe, some companies managed to buck the upward trend today. Nike (NYSE: NKE ) was the biggest loser in the S&P 500, posting a 9.4% drop today, while Ford (NYSE: F ) lost 5%. Both their losses are a bit of a reality check to the optimism around Europe that swept today's markets: Both companies warned of continuing weakness in Europe. Not only that, but Nike warned of slowing growth next quarter in China. For companies like Nike, which have seen emerging markets contribute to their highest growth rates, China’s slowing economy is a second pain point that many investors aren’t watching closely enough.
Finally, we come to insurers. Aetna, Humana, and Wellpoint were all down about 3% today. The losses steam from investor uncertainty, as they continue to digest what the Supreme Court’s upholding of Obamacare means for these companies.
Take the long-term view
That’s it for our look at what caused markets to soar today. If you’re looking for attractive blue-chip dividend payers that outclass low-yielding Treasuries, we’ve prepared a new report named "The 3 Dow Stocks Dividend Investors Need." In the report, our analysts outline the three Dow stocks that not only pay outsized dividends, but offer advantages that should make them outperformers for years to come. This is an opportunity to be one of the first to read this feature report, so click here now to secure your copy, completely free of charge.