Tuesday, August 3, 2010

Reasons Behind the Market's Recent Revival

by Donald Luskin

In my July 2 column, I said it was time to start buying stocks again. The bottom in stocks turned out to be that very day, and the S&P 500 now stands about 8% higher.There are a lot of reasons. Some I expected -- and one comes as a beautiful surprise.

The centerpiece of my buy recommendation was the improvement in the debt situation in Europe. As July has played out, it's only gotten better, with European banking regulators having completed stress tests of 91 European banks, and only seven of them failing.

I've also been saying for several months that once the oil spill in the Gulf of Mexico was brought under control, stocks would rise because a major psychological negative would have been removed. It looks like BP (BP: 39.42, +0.95, +2.46%) finally has a lid on the monster, and it seems to me that bleak mood of the last few months has started to brighten.

Here's the good news I never expected. Are you sitting down? (more)

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