The major market indices are off their recent highs as investors hit the sell button on this quadruple-witching Friday of futures and options expiration. The Dow Jones Industrial Average has snapped an eight-day winning streak while small caps are underperforming with the Russell 2000 index off 1.3%. Investors are once again worried that the Greece debt problem is heating up. Elsewhere a surprise rate hike in India raises new concerns over the recovery. The Greece issue is pushing the euro lower. This is boosting the dollar, which in turn is a drag on commodities. Crude oil is falling toward the $80 level with a 2.3% decline. Gold futures are off 1.8% (more than $20) toward $1,107 an ounce.
Asian markets managed to deliver gains even though investors are still worried that the Chinese government might raise bank reserve ratios again, possibly as soon as this weekend. The Hong Kong Hang Seng index closed up 0.19% and marked its fourth weekly gain in a row. The Chinese Shanghai index posted a +0.7% gain. The Japanese NIKKEI rose +0.75% and delivered its sixth weekly gain in a row. The Japanese market will be closed for holiday on Monday. The big story for the region was a little further west with India announcing a surprise rate hike. The Reserve Bank of India raised rates from a record low of 3.25% to 3.5% and the repurchase rate from 4.75% to 5.0%. It was the first rate hike since July 2008. Apparently Indian regulators felt the need to slow down the economy after inflation numbers hit a 16-month high. This move fuels concerns that governments might start removing stimulus too soon and impede the globe's fragile recovery.
Stocks retreated in Europe. The markets were in positive territory and trading sideways most of the session only to reverse lower late in the day. Greece remains an albatross around the EU's neck. As reported earlier this week it appears help from the EU can't come soon enough and Greece may seek help from the IMF as soon as Easter weekend. This is weighing heavily on the euro currency. Meanwhile in Britain Lloyds Banking Group PLC said they plan to return to profitability in 2010, which is sooner than expected. The stock surged more than 9%. The English FTSE index rose +0.13%. The French CAC-40 fell 0.32%. The German DAX lost 0.5%.
Back home in the U.S. a lot of eyes are on the healthcare debate as Democrats and the Obama administration make a big push just two days ahead of an historic vote on Sunday. At the moment it looks like the Democrats are still coming up short but they have had some highly publicized success converting no votes into yes vote the past few days. It looks like they only need about five more votes for the House to pass this healthcare bill. Believe it or not the HMO healthcare index is up 2.1% on the session.
In corporate news smartphone maker Palm Inc. (PALM) is plunging. The company reported earnings last night and delivered their 11th quarterly loss in a row. Management issued an earnings warning for the current quarter and 2010. Several firms have downgraded the stock to a "sell" rating. Shares of PALM are off 26% near $4.18.
On a more positive note Dow-component Boeing (BA) said they were raising production on their 777 and 747 models sooner than expected. Originally they weren't planning to up production until 2012. These are the big, wide-body planes and BA expects rising demand from the commercial airlines. The company is upping production in mid 2011.
Currently the market is seeing a widespread decline. Biotechs, defense, healthcare and gambling stocks are the only sector indices in positive territory. The worst performers are airlines (-2.7%), oil services (-2.9%), and semiconductors (-1.8%). The market has been overbought for days so a multi-day decline would be healthy and normal.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index: