Intraday Market Update
In the pre-market this morning indices were under pressure thanks to mixed reports from Google and AMD yesterday after the close. More earnings reports before the bell from bellwethers GE and Bank of America tested investor sentiment as both firms reported earnings well above expectations, but missed revenue estimates. Then, at about 10:00 AM EST a flurry of bad news started trickling in, beginning with the Reuter's/University of Michigan's Consumer sentiment index. The index unexpectedly deteriorated, declining from 73.6 in March to 69.5 in April, compared to the increase to 75.0 that economists surveyed by Bloomberg had expected. Typically consumer sentiment is indirectly tied to the labor market, which should raise questions whether two prior weeks of increases in jobless claims is really due to the Labor Department's excuse of "administrative snags," as opposed to actual layoffs.
At about 10:40 AM eastern the SEC announced that it charged Goldman Sachs with fraud related to the trading of sub-prime mortgage backed securities (MBS). The markets began tanking on the news sending the bank heavy S&P 500 down -24 points off of its highs, while the DJIA lost -180 points from its highs. The indices are off of their lowest levels but remain under pressure.
The SEC charges against GS state that the financial firm and one of its employees defrauded investors by misstating and omitting key facts about a financial product tied to subprime mortgages as the US housing market was beginning to falter. The SEC alleges that GS structured and marketed a financial product that hinged on the performance of subprime residential mortgage-backed securities (MBS), and that GS failed to disclose to investors vital information about the financial product. Specifically, the charges mention the role that a major hedge fund played in the portfolio selection process, and the fact that the hedge fund had taken a short position against the financial product.
Goldman Sachs has yet to make a public statement other than it will vigorously defend the charges as they are unfounded.
All commodities are under pressure with the exception of natural gas which is positive by +2.18%. Gold sold off on the GS news and is lower by -2% to $1,135 per ounce. Front month crude oil has lost -2.70% to $84.37 per barrel. Silver is sharply down -4.25% and copper is off by -2.28%.
All major European markets were sharply lower on the heels of the GS news and continued rhetoric over details regarding Greece's debt backstop. Notable losers included Spain (-2.08%), France (-1.94%), Germany (-1.76%), and London (-1.39%).
The Asia-Pacific region didn't fare too well either as all of its major markets were also in the red. Leading the declines were Japan (-1.52%), Hong Kong (-1.32%), and China (-1.10%).
Core Sector List:
Overall reading: All 16 sectors declining
Weakest Sectors: Internet, Banks, Broker Dealers, and Gold Miners
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: