Market Snapshot: U.S. Stocks Lower on Lingering Worries over Eurozone Debt Crisis
The U.S. stocks rally ran out of steam late in session reversing the trend with the three major indices closing lower for the day. The late session sell-off was triggered by the sliding euro and the Chinese Investment Corp.’s statement indicating its intentions to reduce its asset allocation in European government bonds. The Dow closed below 10,000 for the first time since February 6.
All sectors in the S&P 500 but one finished the day in the red. Only Industrials managed to post a modest gain of 0.26%.
In early trading, U.S. equities moved higher supported by the upbeat U.S. data on new home sales, which had its largest rise in almost 2 years and better-than-expected durable goods orders. The Early trading session followed yesterday’s risky assets sell-off in global markets on European credit crisis fears and escalating tension on the Korean peninsula.
Such daily swings in the equity market have become more frequent and are likely to persist for some time reflecting the extremely volatile environment and ongoing uncertainty surrounding euro-area debt crisis and financial regulation.
The VIX index, the so called investors’ fear gauge, rose slightly from 34.61 to 35.02 in late session after falling to 32 in early trading.
In Europe worries have slightly receded over the sovereign debt crisis spreading into the banking sector helping lift the major European bourses. The European major bourses finished higher: the Italian FTSEMIB gained 2.15%, the Spanish IBEX 35 was up 0.42%, the French CAC 40 rose 2.32%, the London FTSE 100 was up 1.97% and German DAX was up 1.55%.
On the economic calendar, the U.S. Census Bureau reported new single-family home sales jumped up by 14.8% m/m in April 2010 to a seasonally adjusted annual rate of 504,000, after a 29.9% jump in March and a 3.2% m/m decline in February reflecting an expected boost to sales prior to the expiration of the first time home buyers’ tax credit on April 30, 2010. Sales of new homes in April were up 47.8% y/y, but they remain down 63.7% from the peak level of July 2005. The three-month moving average of new home sales showed a second gain after declining for six consecutive months.
The U.S. Census Bureau reported that orders for durable goods rose 2.9% in April 2010 to US$193.9 billion (up 12.3% y/y), after a downward revised flat reading in February. The increase in the headline figure in the April report was driven entirely by a US$7.3 billion increase in orders for commercial aircraft, which caused transportation orders to jump by 16.1%. Ex-transport orders fell back by 1% in April 2010, after a strong 4.8% pickup in March.
Into close, the S& P 500 index fell 6.08 points, or 0.57%% to close a t 1,067.95.
The Dow lost 69.30 points, or 0.69% to close at 9,974.45.
The tech-heavy Nasdaq composite index was down 15.07 points, or 0.68% to close at 2,195.88.
Treasurys prices fell with the yield on the benchmark 10-year Treasury note up yielding 3.19% , up from 3.16% from late on Tuesday.
Crude for July delivery settled $2.76 higher, or 4% up, at $71.51 a barrel on the New York Mercantile Exchange as investors grew more confident about global recovery.
In currency markets today the euro continued sliding against the yen and the dollar.
In currency, EUR/USD traded at 1.2172, down from 1.2344 late on Tuesday in New York, Cable was quoted at 1.4383, down from1.4406. USD/JPY traded at 89.97, down from 90.21. USD/CHF was at 1.1607, up from 1.1565, while USD/CAD was quoted at 1.0706, up from 1.0670.
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