May 2012 NRA Housing News Doesn’t Keep Market Rally Afloat After Papademos Talks “Grexit”:
U.S. equities still jittery and susceptible to Euro headline risk.
Housing news didn’t help the market maintain an early rally today as news from Greece trumped economic data. The National Association of Realtors said today, median home prices rose 10 percent from 2011. The increase in home prices was the best jump in house values since January 2006. The median home now costs 177,400 and sales of previously occupied homes rose 3.4 percent last month to 4.62 million annually.
Greece’s former Prime Minister Lucas Papademos Weighs In On “Grexit”
Positive news from the housing sector was trumped late in the day by reports that Greece’s former Prime Minister Lucas Papademos stated the country was mulling leaving the EU.
Former Prime Minister Lucas Papademos stated:
“Although such a scenario is unlikely to materialize and it is not desirable either for Greece or for other countries, it can not be excluded that preparations are being made to contain the potential consequences of a Greek euro exit,” Read more here at DowJones.com
When the news was announced, financial stocks which were leading the market higher fell hard and all the day’s gains were wiped out. In an environment where a statement above can cause traders to flee equities for safe havens, this means sentiment hasn’t changed – enough. News announcements about a Greek exit from the European Union – also known as “Grexit” can move sentiment sharply although we believe the euro region is better off when decoupled and a breakup will be a long term positive.
The S&P 500 barely closed the day positive while negative EU sentiment risks are still high and have put good U.S. economic data on the back burner. The S&P 500 closed up .64 to 1,316 rising .05 percent. We are monitoring the dollar/euro for more clues on longer term sentiment.