Market Snapshot: U.S. Stocks Hit 7-Month Lows
U.S. stocks fell sharply for the second session as the mood of investors had not changed much since Friday amid continued worries about the European debt crisis derailing the global recovery. The corporate and economic calendar were relatively light and also failed to brighten the general sentiment. Selling pressure intensified in late trading as the euro took a dive against the dollar and data on consumer credit indicated that households remain cautious about spending.
In the S&P 500 index, industrials (-2.47%) and financials (-1.95%) led the broader decline. Goldman Sachs shares were down 2.6% to $138.68 on the news that the Financial Crisis Inquiry Commission subpoenaed information from the company after it failed to comply with earlier requests. Among technology stocks, Apple shares fell 2% to $251 despite the introduction of a new iPhone 4.
The Dow fell 1.2% to a 7-month low and below the level registered on May 6 due to a “flash crash.” Telecom was the only sector in the positive territory as investors favored safer stocks.
In Europe, finance ministers are meeting in Luxembourg to hash out the details of a €440 billion ($527 billion) loan package intended to be a backstop for indebted European countries. As a part of this program, a special purpose vehicle will be set up to borrow money from capital markets and then lend at a higher interest rate to the troubled country, WSJ reports.
Despite an unexpected jump in German factory orders (up 2.8% seasonally adjusted versus expectations of 0.4% decline), the further drop in the euro pushed European stocks down. Overall basic materials and industrials led the decline. The German DAX was down 0.57%, the French CAC 40 lost 1.21%, the London FTSE 100 was down 1.11%.
On the economic calendar, the Federal Reserve Board reported total outstanding consumer credit rose by US$1 billion in April, rising at a seasonally adjusted annual rate of 0.5% m/m, after a downward-revised 2.7% contraction in March. However, the gain in April was driven entirely by a 7.1% gain in non-revolving credit, including student loans and auto loans. On the other hand, revolving credit continued to fall, with no signs of easing in the pace of decline. On an annualized basis, revolving credit collapsed 12% in April after falling 5.3% in March. Outstanding consumer credit rose for the first time in January after a year of contraction and rose again in April, the gains driven by revolving credit. However, as of April 2010, revolving consumer credit had contracted for 18 of the previous 19 months.
Into close, the S& P 500 index fell 14.41 points, or 1.35% to close a t 1,050.47.
The Dow slid 115.48 points, or 1.16% to close at 9,8161.49 and 1.16%.
The tech-heavy Nasdaq composite index was down 45.27 points, or 2.04% to close at 2,173.9.
Treasurys prices rose with the yield on the benchmark 10-year Treasury note down yielding 3.14%, down from 3.20%, from late Friday.
Crude for July delivery settled down 13 cents, or 0.2%, at $71.38 a barrel on the New York Mercantile Exchange on continued fears over slowing demand for oil due to a tepid global recovery.
In currency markets today the euro stabilized in late trading after falling to new 4-year lows against the dollar.
In currency, EUR/USD traded at 1.1919, down from 1.1968 late on Friday in New York, Cable was quoted at 1.4467, down from 1.4476. USD/JPY traded at 91.41, down from 91.84. USD/CHF was at 1.1633, up from 1.1612, while USD/CAD was quoted at 1.0601, up from 1.0597.
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One Response to “Market Snapshot: U.S. Stocks Hit 7-Month Lows”
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