Rumors have become a dietary staple of US market bulls of late.
US stocks yesterday fed on late-afternoon whispers that G20 nations were considering a $600 billion European Union bailout — sending the Dow Jones industrial average, the S&P 500 Index and the Nasdaq soaring in the last hour of trading.
The bailout, which would have come through the International Monetary Fund, according to the rumor, was enough to wash away Euro debt fears in a fact-deprived vacuum.
Traders said it was too timely to ignore, particularly just ahead of a likely do-or-die summit tomorrow on the euro crisis.
“It’s difficult to get a bottom line on the European situation,” portfolio manager Philip Dow told Bloomberg. “It’s a challenging environment to manage money.”
The rumor-fueled Wall Street rally pushed the Dow up more than 200 points before a just-before-the-closing-bell report debunking the rumor deflated marts.
The Dow raced up 200 points, erasing losses to close up 46.24 at 12,196.37. The S&P rally also sent the index into the black to close up 2.54 at 1,261.01. The Nasdaq pushed into positive territory as well, but slipped into the red at the close at 2,649.21, down less than a point.
Year-to-date, the Dow is ahead 5.35 percent, and the S&P is up 0.27 percent. The Nasdaq is behind 0.14 percent for 2011.
While stocks added about $50 billion in value from the IMF rumor alone, traders are hard-pressed to find investments, and might be gun-shy about more rumor-mongering ahead of the summit.
