Wednesday, September 14, 2011

Markets waver on mixed signals about European debt crisis

After opening higher, stocks have been weak.  Dow is down 27, decliners ahead of advancers 2-1 but NAZ was up 10.  Bank stocks were lower on increased European debt worries.

S&P 500 Financials Sector Index

Value 166.66 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change    -0.61   (-0.4%)

The MLP index fell 1+ to the 347s (after going sideways for the last year) & the REIT index fell 2 to 218 (far below the 250 interim peak reached earlier this year).  Junk bond funds were mixed as were Treasuries ahead of an auction for 30 year debt at lunchtime. Oil declined from a 6-week high on concern that Europe's debt crisis & the faltering US economic recovery will temper fuel demand. Gold is doing little.


Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLV11.NYM.....Crude Oil Oct 11...89.25 ...Down 0.96 (1.1%)

GCU11.CMX...Gold Sep 11.....1,831.80 .....Down 4.40  (0.2%)

Click below for the latest market update:

Retail Sales in U.S. Unexpectedly Stagnate as Employment Sta

Photo:   Bloomberg

Consumers spent less on autos, clothing & furniture to leave retail sales unchanged in Aug, suggesting households became more cautious during wild stock market fluctuations & increased fears about the economy.  The Commerce Dept also said that retail sales were slightly weaker in Jul than first thought, rising just 0.3% (down from the initial reading of 0.5%).  Auto sales fell 0.3% in Aug & sales at clothing stores declined 0.7%.  Hurricane Irene likely disrupted sales in late Aug along most of the East Coast.  The flat reading for retail sales was a surprise given private reports from retailers & auto dealers suggesting a brighter picture.  The gov report showed sales at department stores fell 0.3% & a broader category of general merchandise stores, which includes big retailers such as Wal-Mart (WMT) & Target (TGT), showed a slight 0.1% gain.  The 0.7% fall in sales at specialty clothing stores followed a 0.3% decline in Jul.  This may not be an official recession, but it feels like one.

Moody's cut the credit ratings of 2 French banks because of their exposure to Greek debt, highlighting growing risks to Europe's financial sector from a deepening euro zone sovereign debt crisis.  The head of the ECB said that it would soon present options for issuing a common euro zone bond, despite huge political hurdles especially in Germany.  The one-notch downgrade of Societe Generale & Credit Agricole came hours before the leaders of Greece, France & Germany were to hold a video conference on measures to head off a potential Greek default.  China added its voice to US concerns over Europe's apparent inability to stop debt contagion spreading, while Indian & Brazilian officials said major emerging economies were discussing increasing their euro sovereign holdings.  This is a new world, emerging countries may help with European bailouts.  Chancellor Angela Merkel & President Nicolas Sarkozy were set to press Prime Minister George Papandreou to enforce harsh austerity measures to meet fiscal targets.  "We want a guarantee that the recovery plan announced will be put into action," a French gov spokeswoman said.  Uncertainty about Greek (along with other countries) debts keeps rising.

ECB Will Lend Dollars to Two Euro-Region Banks as Market Funding Tightens

Dell will repurchase of an additional $5B of its shares, a month after the #2 PC maker slashed its 2012 sales forecast on uncertainty in gov & corp spending.  The repurchase was in addition to the $2.16B it had remaining from prior authorizations at the end of Q2.  At the current market price, this could amount to about ½B shares.  The stock rose 26¢ to 14.62.

Dell board authorizes additional $5 billion share buybackat Reuter

Dell Inc. (DELL)

stock chart

European banks are losing deposits as savers & money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic & financial conditions.  In the US, that is called a "run on the banks."  There is no relief in sight for the European debt crisis, but the stock market is taking it fairly well.  At another time, Dow could be well under 10K.  But it's still just a few hundred points above the 10.7K lows last month & one  headwind can take it to a new 2011 low.  So far, Dow is down 535 in Sep & 500 YTD.  Major news about reducing the federal deficit has not be reported & could bring that major headwind.

Dow Industrials (INDU)

stock chart

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1 comment:

Kevin12345 said...

Market is under pressure since long 2008 times..even though worlds was recovering from the recession during this period , but a new bubble was being formed in European economy which ultimately lead to debt crisis

To avoid the risks, I follow they give an accurate predictions about the market and other happenings.