What a difference a few hours makes. Greek officials approved a massive debt-reduction and cost-cutting plan Thursday morning, but by Thursday night, that deal had holes in it.
Finance Ministers from the 17-nation eurozone want steeper cuts to the tune of $430 million in extra austerity. They also want a written guarantee from Greece’s Parliament that the measures will stay intact even after elections of a new government in April.
So it’s back to the drawing board in Athens. More meetings are set to take place through the weekend, as Greece faces a deadline next week to sign off on the increased demands.
Trouble is, it took weeks to come up with this agreement that the European ministers have now rejected. There are also no guarantees that Greece can squeeze out any more reforms from its people. The spending cuts, wage and pension reductions and other reforms have been described as “Draconian.” Greeks in protest are taking to the streets of Athens today for the start of a 48-hour general strike that will shut down many transit systems and leave hospitals with skeleton staffs.
The uncertainty there is having ripple effects here that is overshadowing positive domestic economic news yesterday. The Labor Department said jobless claims fell last week to 358,000, the lowest level since April of 2008. Yet stock markets, while finishing in the plus column, experienced relatively minute gains.
While stocks are higher for the week heading into Friday, there is a chance markets will snap their five-week winning streak. Stock futures are indicating a lower open Friday morning.
It’s hard for many investors to understand why U.S. stocks aren’t having bigger and stronger reactions to the positive domestic news. Mark Newton, the chief technical officer at Greywolf Securities, explains.
“Stocks are tired here, with the exception of a handful of tech stocks. Very few have moved to new highs to confirm the underlying indices’ moves. Both materials and financials have begun to stall out a bit after recent gains,” he said.
Apple (NASDAQ:AAPL) is included in the few tech stocks Newton cites. Its shares are soaring to $493 each and the market cap of Apple is now bigger than not only that of ExxonMobil (NYSE:XOM), but Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) combined.