Intraday Market Update
The inability of European leaders to agree on policy is adding to speculation that the euro currency could fail and is causing a severe sell-off in equity markets throughout the world. At a minimum investors are concerned that significant additional regulation will be required to save the currency and the financial crises will derail the global recovery, leading to a wider market correction than many anticipated. In the US markets have fared far worse. The biggest international loser was Germany, closing -2.25% lower, compared to the S&P 500 which was -2.75% lower in mid-day trading. The Russell 2000 is off by more -4.00%, the NSDAQ is off by about -3.00% and the DJIA is off by -2.50%. All of the indexes are well off their lows.
Europe's debt crises poses many risks to the US economic recovery. First, spreading financial market stress caused by sovereign debt problems or insolvency will cause US Banks to suffer considerable losses due to their overall credit exposure to those countries. And second, if Europe slides into a deep recession it will severely affect our international trade with those countries.
Adding to the worries here in the US was the failure of the Senate to pass a cloture motion on financial regulation yesterday afternoon, which is adding more uncertainty in the markets. The Senate is scheduled to vote again today at 2:30 PM EST. Democrats are indicating they have enough votes to pass the cloture motion this time around but they also indicated the same thing yesterday afternoon.
Today's economic news is not helping matters either. Initial jobless claims jumped +25,000 to 471,000 last week, and the prior week was revised +2,000 higher. The headline number of 471,00 is the highest reading in 5 weeks and +12,000 higher than one month ago. The Conference Board's index of leading economic indicators posted its first decline in a more than a year. The index was down -0.1% in April, reflecting a decline in building permits and shortened delivery times. Unemployment claims and consumer confidence weighed on the index.
In earnings news, Sears Holdings Q1 profit slipped -38%, hit by weaker margins and slightly higher costs. Shares of SHLD are down -8%. Applied Materials beat expectations and raised guidance but that didn't help the stock as shares are off by more than -3%. Office products retailer Staples beat expectations but offered a lackluster outlook for the rest of its fiscal year, citing they expect only a modest U.S. economic recovery. Shares of ODP are off by about -6%.
Commodities remain under pressure, especially crude oil which is off by -3.50% to $69.85 per barrel. Gold is down -0.60% to 1,185 per ounce, while silver is off by -2.5%. Natural gas is down by -1.25% after a larger than expected build in weekly inventories. Copper is hanging tough tacking on +0.50%, but copper has lost -11.5% so far in the month of May.
All major markets throughout the world were sharply lower on Thursday, especially in Europe. Notable losers in the Asia-Pacific region were Australia (-1.61%), Japan (-1.54%), China (-1.23%), and South Korea (-1.83%). Notable losers in Europe were Germany (-2.02%), London (-1.65%), France (-2.25%) and Italy (-1.69%).
Core Sector List:
Overall reading: All 16 sectors declining.
Weakest Sectors: Oil Services, Insurance, Banks - Most sectors down over -2%.
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: