Positive Housing Rebound BOOSTS U.S. Stock Market

Major U.S. stock indexes posted small gains for the day but fell hard in the last minutes of trade.

A positive housing report boosted U.S. stocks and ETFs in front of the much anticipated European summit meeting scheduled for Brussels on Thursday.

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For the day, the Dow Jones Industrial Average (NYSEARCA:DIA) rose 0.26%, the S&P 500 (NYSEARCA:SPY) gained 0.48% and the Russell 2000 (NYSEARCA:IWM) added 0.41%.

Volume was light and the range was tight.

Most notably, the major indexes took a sharp dive into the close as depicted in the chart below.

Apparently the professional trading crew didn’t want to be short overnight and during early morning European trading.

Case/Shiller reported that U.S. housing prices rose 1.3% while June consumer confidence fell.

Spanish and Italian bond yields spiked and the Eurodollar dropped again as investors worried about Europe and the actions or inaction coming from the week’s summit meeting in Brussels.  Ratings agency Egan-Jones slapped another downgrade on the region by cutting Germany’s credit rating from A+ from the previous AA- on concerns that the country’s economic strength could be sapped by its weaker neighbors or a breakup of the European Union.

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German Chancellor Angela Merkel stuck to her guns regarding Germany’s not taking on more debt to support the weaker countries in Europe and no doubt she’ll face strong opposition from Spain, Italy and even France in the upcoming summit meeting.

Gold (NYSEARCA:GLD) was lower for the day while oil (NYSEARCA:USO) was mostly flat.

Tomorrow brings durable goods orders and pending home sales and the likelihood of a Supreme Court ruling on Obamacare.  Also, rumors abound that Moody’s will be soon downgrading Spain’s sovereign debt which will add further uncertainty to already nervous markets.

Bottom line: Global markets remain on a hair trigger as Europe dithers.

John Nyaradi is the author of The ETF Investing Premium Newsletter.