Intraday Market Update
After trading as low as 1,120 overnight the S&P 500 futures rebounded about +20 points to 1,140, briefly peaking above Friday's close. However, the selling picked up steam which sent to futures back down -28 points to 1,112.75. Dip buyers showed up sending the index back up about +9 points. All of the major indexes are now off by about -1% in mid-day trading. Resistance is now prior support near Friday's lows. All 16 sectors from our core sector list are in the red with the weakest sectors being banks and home construction.
The euro has traded to new four year lows against the US dollar as the warnings from European leaders continue to surface that their $1 trillion emergency loan package for debt ridden governments would not be enough to resolve the Euro zone's crises. After peeking its head below October 2008 lows, the euro is barely hanging on to this support and has now broken upward trend lines that began in September 2003 and November 2005. If the euro breaks lower from here it appears 1.17 is the next stop, or about -5% below current levels. Monthly chart of EUR/USD:
The pressure on the euro continues as European leaders are saying that the loan backstop by itself isn't enough and that governments must make far-reaching changes to get their debt under control and get in-line with the rules that govern the 11 year old currency. German Chancellor Angela Merkel conceded over the weekend that the aid package was no more than a band-aid solution to the problems affecting many European countries. According to Merkel the solution is to gain greater cooperation in financial and economic policy across Europe to ensure the euro's long term viability. Merkel has been an advocate of tighter rules on sovereign debt and has gone as far as wanting to expel violators of the rules.
Front month crude oil continues its decline today and traded as low as $69.30 before rebounding $1 higher. Crude oil has lost about -20% since its intraday high of $87.15 on May 3rd.
In economic news, manufacturing activity remains strong in the New York region but it did slow from April's strong pace. The Empire State index for May came in at 19.11. The April index was 31.86 which was a huge acceleration from March.
In earnings news, Lowe's missed estimates which is sending shares lower by about -4%. Lowe's is the 2nd largest home improvement retailer in the US behind Home Depot. HD reports earnings tomorrow along with Hewlett-Packard. The retail sector takes center stage later this week as many firms report earnings, including Abercrombie & Fitch, Dick's Sporting Goods, TJ Maxx, Wal-Mart, Advanced Auto Parts, Limited, PetSmart, Ralph Lauren, and Target to name a few.
Commodities remain under pressure led by copper which is down -6%. Gold is relatively flat at 1,228 per ounce. Silver is off by -1.5%. Natural gas is hanging tough again and is higher by +1.50%. Front month crude is down -1.75%.
Most major markets throughout the world were lower on Monday. Notable losers in the Asia-Pacific region were China (-5.07%), Japan (-2.17%), Australia (-3.12%), and Hong Kong (-2.14%). In Europe the losers were France (-0.47%) and Spain (-0.31%). Germany was positive by (+0.17%) and London was break-even.
Core Sector List:
Overall reading: All 16 sectors declining.
Weakest Sectors: Gold Miners, Home Construction, Banks
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: