Stocks sank at the opening & remained under water all day. Dow dropped 139 closing near the lows, decliners over advancers 4- & NAZ fell 33. Bank stocks led the decline with the Financial Index falling almost 3 to the 173s.
The MLP index recovered some of its AM losses to finish down a fraction in the 385s (but remaining near the 390 record). The REIT index fell 3 to 231 while junk bond funds were mixed to lower (not far from their yearly highs). Treasuries climbed, pushing the 10- year bond yield down the most in 7 weeks, as investors sought refuge on concern Europe’s fiscal turmoil will undermine the global economic recovery. Oil went below $100, ending its 7 day rally. Gold fell, capping the longest slump in over 2 years as Europe’s deepening debt crisis drove commodities & stocks lower.
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Photo: Bloomberg
The balance sheet of the ECB soared to a record €2.73T ($3.55T) to finance lending to euro-area banks which jumped €214Bs to €879B last week. The balance sheet increased €239B in the week & was €553B higher than 3 months ago. The € weakened to its lowest level in almost a year (just above $1.29) as the announcement highlighted risks from Europe’s debt crisis. The ECB last week awarded 523 banks 3-year loans totaling a record €489B to encourage lending to companies & households aimed at preventing a credit shortage. But so far, banks are parking the money back at the ECB. Overnight deposits at the central bank increased to an all- time high of €452B yesterday. This month the ECB cut its benchmark interest rate to 1%, matching a record low, as the debt crisis threatened to engulf Italy & Spain. Growth in the 17-nation euro region will slow to just 0.3% next year from about 1.6% this year, the ECB forecast this month. Easing financial tensions in Italy allowed it to have a successful debt auction today, but that isn't getting attention. The ECB is & that's not a good sign for the financial markets.
Iran's navy chief warned that his country can easily close the strategic Strait of Hormuz at the mouth of the Persian Gulf, the passageway for a 6th of the world's oil (the 2nd such warning in 2 days). Yesterday it threatened to close the strait if the West imposes sanctions on Iran's oil shipments. Iran is concerned that the West is about to impose new sanctions that could target Tehran's oil industry & exports. Western nations are growing increasingly impatient with Iran over its nuclear program. The US & its allies have accused Iran of using its civilian nuclear program as a cover to develop nuclear weapons. With concern growing over a possible drop-off in Iranian oil supplies, a senior Saudi oil official said Gulf Arab nations are ready to step in if necessary & offset any potential loss of Iranian crude. However, that oil would have to go thru the straits. Iran is the 2nd largest OPEC oil producer, with an output of about 4M barrels a day & relies on oil exports for about 80% of its revenues. This is another touchy story which the markets are watching closely.
Iran warns of closing strategic Hormuz oil route AP
Intl tensions are getting more attention by investors. The ECB story is being talked about along with oil shipments thru the gulf. The US navy is trying to reassure the world that the Gulf will remain open. This should be a quiet week for the markets, with an upward bias. Fund managers like to buy stocks to raise their portfolio values for the year end balance sheets. But that isn't working out. Dow is up 600 (5%) YTD, but the S&P 500, which gets more attention, is down 7 (about ½%). There may a fair amount of excitement in the last 2 trading days of 2011.
Dow Jones Industrial Average
The MLP index recovered some of its AM losses to finish down a fraction in the 385s (but remaining near the 390 record). The REIT index fell 3 to 231 while junk bond funds were mixed to lower (not far from their yearly highs). Treasuries climbed, pushing the 10- year bond yield down the most in 7 weeks, as investors sought refuge on concern Europe’s fiscal turmoil will undermine the global economic recovery. Oil went below $100, ending its 7 day rally. Gold fell, capping the longest slump in over 2 years as Europe’s deepening debt crisis drove commodities & stocks lower.
AMZ Alerian MLP Index
DJR Dow Jones Equity REIT Index
Click below for the latest market update:
Treasury yields:
U.S. 3-month | 0.005% | |
U.S. 2-year | 0.267% | |
U.S. 10-year | 1.913% |
| CLG12.NYM | ...Crude Oil Feb 12 | ...99.52 | ... 1.82 | (1.8%) |
The balance sheet of the ECB soared to a record €2.73T ($3.55T) to finance lending to euro-area banks which jumped €214Bs to €879B last week. The balance sheet increased €239B in the week & was €553B higher than 3 months ago. The € weakened to its lowest level in almost a year (just above $1.29) as the announcement highlighted risks from Europe’s debt crisis. The ECB last week awarded 523 banks 3-year loans totaling a record €489B to encourage lending to companies & households aimed at preventing a credit shortage. But so far, banks are parking the money back at the ECB. Overnight deposits at the central bank increased to an all- time high of €452B yesterday. This month the ECB cut its benchmark interest rate to 1%, matching a record low, as the debt crisis threatened to engulf Italy & Spain. Growth in the 17-nation euro region will slow to just 0.3% next year from about 1.6% this year, the ECB forecast this month. Easing financial tensions in Italy allowed it to have a successful debt auction today, but that isn't getting attention. The ECB is & that's not a good sign for the financial markets.
Iran's navy chief warned that his country can easily close the strategic Strait of Hormuz at the mouth of the Persian Gulf, the passageway for a 6th of the world's oil (the 2nd such warning in 2 days). Yesterday it threatened to close the strait if the West imposes sanctions on Iran's oil shipments. Iran is concerned that the West is about to impose new sanctions that could target Tehran's oil industry & exports. Western nations are growing increasingly impatient with Iran over its nuclear program. The US & its allies have accused Iran of using its civilian nuclear program as a cover to develop nuclear weapons. With concern growing over a possible drop-off in Iranian oil supplies, a senior Saudi oil official said Gulf Arab nations are ready to step in if necessary & offset any potential loss of Iranian crude. However, that oil would have to go thru the straits. Iran is the 2nd largest OPEC oil producer, with an output of about 4M barrels a day & relies on oil exports for about 80% of its revenues. This is another touchy story which the markets are watching closely.
Iran warns of closing strategic Hormuz oil route AP
Intl tensions are getting more attention by investors. The ECB story is being talked about along with oil shipments thru the gulf. The US navy is trying to reassure the world that the Gulf will remain open. This should be a quiet week for the markets, with an upward bias. Fund managers like to buy stocks to raise their portfolio values for the year end balance sheets. But that isn't working out. Dow is up 600 (5%) YTD, but the S&P 500, which gets more attention, is down 7 (about ½%). There may a fair amount of excitement in the last 2 trading days of 2011.
Dow Jones Industrial Average
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