Fundamentals

U.S. Stocks Fall in Shortened Trading Day

U.S. Session Key Developments

•    Commodities Fall, Dollar Shows Strength
•    Concerns Over Dubai Diminish Risk Appetite

U.S. equities followed the downward global trend as investors retreated risk on concerns over Dubai’s attempt to reschedule its debt.  The MSCI World Index fell 2.3 percent in the last two days as Dubai World attempts to extend the maturities of some of its $59 billion of liabilities.  Financials stocks took the biggest hit as banks in the MSCI World Index fell 2.4 percent yesterday, followed by JPMorgan and Bank of America losing over 2 percent each in today’s U.S. session.  Overall, investors showed a clear aversion to risk over the last two days and commodities were sold off in addition to stocks.  Crude oil traded down $1.91 to $76.05, while gold plummeted to $1133 in the morning before gaining back much of the loss to close at $1175.  Investors moved their money towards safety, pushing up U.S. Treasurys and the Dollar Index which rose back above 75 during intraday trading.  The U.S. stock exchanges closed three hours early, after 4.5 billion shares were traded, the least since December 26.  Looking forward to next week, key economic data released will include ISM Manufacturing, housing data, and jobs data.  The unemployment rate for November will be released on Friday and is expected to remain unchanged at 10.2 percent.

DJIA 30                      10,309.92                   -154.48               -1.48%
The Dow Jones Industrial Average fell over a percent as all thirty stocks in the index closed lower on the day.  Investors showed concern over the economic recovery and pulled money out of riskier, speculative assets such as commodities driving energy stocks and basic materials lower by 2 percent each.  Caterpillar and Alcoa fell over 2 percent each while General Electric lost just over a percent.

S&P 500                          1,091.49                        -19.14                -1.72%
The broader S&P500 index closed lower today as each of its sectors were in the red.  The financial sector was the worst performer, down 2.72 percent on concern over Dubai debt exposure.  U.S. stocks pared declines, however, after bank analyst Richard Bove said that American lenders have “minimal” exposure to Dubai.  By the end of the day, all but four of the S&P’s 500 stocks fell on the day.

NASDAQ                         2,138.44                      -37.61               -1.73%
Trading in the tech-heavy NASDAQ led to the largest decline of the three indices as its technology stocks fell over 1.7 percent.  Research In Motion and Oracle fell over 2 percent each, while Microsoft, Apple, and Google each dropped over 1 percent.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com