Market Commentary: The U.S. stock markets should get a lift on Monday morning after euro zone finance ministers agreed over the weekend to lend Spain up to 100 billion euros ($125 billion) to help recapitalize its battered banks.
The surprising large amount of aid removes a huge cloud that has been hanging over financial markets with investors fretting the banking crisis in Spain might dramatically compound the contagion risk for other countries in the region. For Wall Street, anything that diminishes fears over European economic and financial conditions should prove to be welcome news.
If this assessment proves accurate, the Dow Jones Industrial Average will probably stage a roughly 200+ basis point rally between Monday and Thursday before running out of steam. A stock market rally of this magnitude will almost certainly limit the ability of mortgage interest rates to creep notably lower.
