Intraday Market Update
Stock markets around the world are under severe pressure on Friday after weak trading in Asia and sharply lower sessions in Europe and the UK. The insolvency worries about Europe may have subsided, but they have now turned into worries that their fiscal austerity measures will slow down economic growth. This, coupled with a stubbornly high unemployment rate in the US, is bringing fear to investors that the global economic recovery may be derailed. Front month crude oil, currently trading around $71 per barrel (-4% today), has lost major trend line and horizontal support and appears to be headed to the $68 handle. On May 3rd crude oil traded as high as $87.15 per barrel and has lost -19% ever since. Crude oil never came close to recovering after Thursday's plunge like the equity markets did. If this isn't flashing signs of a slower economic recovery then I don't what is:
All of the major US indices gapped lower and are now trading at least -2% lower. Leading the declines are the NASDAQ and Russell 2000 which are off by almost down -3%. The DJIA is down -2% while the S&P 500 is off by about -2.5%. All major sectors are significantly lower with the exception of gold miners.
The euro today broke last week's plunge low against the dollar which has helped push the Dollar Index to new 52 week highs. That in turn has pressured commodity prices, especially energy and industrial metals. What's driving commodity prices lower is more likely the fear that there is going to be a slowdown in the global economic recovery which will weaken demand.
In economic news, retail sales rose +0.4% in April which extends a string of gains this year. Ex-auto retail sales rose +0.4% and ex-auto ex-gas retail sales also rose +0.4%. The gains follow an upwardly revised +2.1% surge in March that came on top of a +0.6% gain in February and a +0.3% gain in January.
Industrial production jumped +0.8% in April with the manufacturing component showing a +1% gain for the second month in a row, signaling the US industrial economy is moving fast and being driven by business investment. Manufacturing is being led by the business equipment component which extended this year's solid numbers with a +1%. However, the consumer goods component is showing less strength and was only up +0.2 versus a +0.1% rise in March and a -1.3% decline in February.
The consumer sentiment report is improving, but not by much. The headline number rose +1.1 points to 73.3 for mid May. This shows strength relative to April's numbers but no strength at all compared to March or February when the index in both months came in at 73.6.
Visa and MasterCard are getting hammered today after the Senate included limits on debit card fees in their financial reform bill. Nonetheless, the Federal Reserve will be setting the rules on fees charged to merchants for transactions. The news sent shares of both companies down about -10%. I have wonder why in the world our government is involved in this, especially the Federal Reserve?
All commodities are under pressure with the exception of Gold which relatively flat. Silver is off by -1.5% and copper is down -3.3%. Natural gas hanging tough and down -0.50%. Front month crude is the big loser and down over -4%.
All major markets throughout the world were lower on Friday. Losers in the major markets were Japan (-1.49%), Hong Kong (-1.36%), Germany (-3.12%), London (-3.14%), France (-4.59%), and Spain (-6.64%).
Core Sector List:
Overall reading: All 16 sectors declining.
Weakest Sectors: Semiconductors, Banks, Oil Services
S&P 500 - Daily and 30-minute Intraday Charts:
Dow Jones - Daily and 30-minute Intraday Charts:
NASDAQ - Daily and 30-minute Intraday Charts:
Russell 2000 - Daily and 30-minute Intraday Charts: