Dow

U.S. Equities Decline on Jobless Claims, Chain Store Sales

U.S. Session Key Developments

•    Initial Jobless Claims Rise Last Week By Most in Three Months
•    July ICSC Chain Store Sales Decline From Month Prior
•    Commodities Continue Ascent, Led By Surging Wheat Prices

U.S. stocks declined for a second day this week as an unexpected rise in American initial jobless claims and continuing claims stoked concerns that the U.S. recovery is stalling.  The weakness in equities caused the Dow Jones Industrial Average to dip to 10674, while the S&P 500 fell to 1125.  The jobs data, released by the Labor Department one hour before U.S. trading began, showed that initial jobless claims rose by 19,000 to 479,000 in the week ended July 31, the most since April and worse than the most bearish economic forecasts.  Continued claims were also higher than expected, rising to 4.53 million in the week ended July 24.  The employment data seemed especially concerning to investors today, due to concerns that it could be a bearish precursor to tomorrow’s nonfarm payrolls release at 12:30 PM GMT.  The consensus estimate is for a drop of 65,000 in July nonfarm payrolls, compared to a decline of 125,000 in the month prior.  Furthering the bearish case today was the ICSC Chain Store Sales release, which showed that sales at 30 chain stores climbed 2.8 percent in July, falling short of last month’s 3.0 percent gain.  The data fell short of forecasts and further eroded sentiment, sending risky assets lower and pushing the two-year Treasury note yield toward an all-time low, at 0.53 percent.

On the commodities front, agriculture continued its strong showing, led by wheat contracts, which rose over 7.9 percent to $815.25 on the CBOT.  The move came after an announcement from Prime Minister Vladamir Putin that Russian farmers would no longer be allowed to export the commodity due to the country’s worst drought in 50 years.  Other commodity classes posting strong gains today included metals, led by 1 percent gains for aluminum and copper, while silver and gold futures rallied 0.4 percent and 0.1 percent on the COMEX, respectively.  The active gold contract closed the day above the $1197 level, a seventh consecutive gain for the yellow metal and its highest closing price since July 15.

DJIA 30                      10,674.98                    -5.45                -0.05%
The Dow Jones Industrial Average dipped slightly lower today, as sixteen of its 30 bluechip stocks closed lower on the day.  American Express posted the largest decline, dropping over 2 percent after hinting at possible changes to its financial targets.  Other firms pulling down the index included Pfizer, which fell 1.5 percent, and Microsoft which declined 1.4 percent.  Caterpillar, on the other hand, posted the largest gain on the Dow, rallying 1.1 percent after announcing an expansion and new hiring at a North Carolina factory.

S&P 500                               1,125.81                               -1.43                      -0.13%
The broad-based S&P 500 fell for a second time this week, led by a 0.4 percent decline in financial shares.  Bank stocks were especially weak, dropping over 0.5 percent after Goldman Sachs announced it may spin off part of its proprietary trading operations into an independent entity.  The investment bank’s share price fell by 0.5 percent as a result, while shares of U.S. Bancorp and Bank of America dropped over 1 percent.  Furthering index weakness today were retailers, led by a 7.7 percent decline for J.C. Penney, after the third-biggest U.S. department-store announced a 0.6 percent decrease in July sales.

NASDAQ                              2,293.06                               -10.51                    -0.46%
The tech-heavy Nasdaq posted the biggest loss among major U.S. indices, dropping nearly half of one percent on weakness in technology shares.  Research in Motion contributed heavily to the move, falling over 2 percent to $52.23, its lowest closing level since July 8.  Shares of the Blackberry maker have dropped over 30 percent since April.

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

Dow

U.S. Stocks Gain on Increased Earnings Forecasts

U.S. Session Key Developments

•    Home Sales, Leading Indicators Beat Expectations
•    Profit Forecasts Raised For Multiple Firms
•    Crude Oil Rallies To Eleven-Week High

U.S. stocks followed their European and Chinese counterparts higher, as better-than-expected home sales and improved earnings forecasts helped boost investor sentiment regarding the economic recovery.  The positive news sent stocks on the Dow Jones Industrial over 1 percent higher to 10322, while shares on the S&P 500 gained over 2 percent to 1093.  On the earnings side, companies ranging from United Parcel Service Inc. to AT&T Inc. improved their earnings outlooks as executives see growing demand from overseas.  Qualcomm shares, for example, rose 8.2 percent as the chipmaker said today that it expects higher profits and selling prices for its products this year.  As for the economic docket, home sales fell 5.1 percent in June to a 5.37 million annual rate, but this decline was better than the 9.9 percent decrease expected.  It was the second consecutive monthly decline for purchases, which may continue to struggle as the federal incentives to buy homes cease.  Also released today was the leading indicators, which declined 0.2 percent, less than the 0.3 percent drop expected.  Leading indicators, which point to the direction of the economy over the next 3-6 months, have declined in 2 of the past 3 months.

DJIA 30                         10,322.30                              +201.77                         +1.99%
The broad-based Dow Industrial Average rallied nearly 2 percent today, led by Boeing Co. which rallied over 5 percent to $66.  The Chicago-based planemaker announced that it won over 200 jetline orders worth nearly $30 billion at this week’s Farborough Air Show.  This was more than three times the number of orders announced in Paris a year ago and showed a huge rebound in demand.  Other firms posting large gains on the day included American Express, which rose 4.9 percent, and Du Pont, which added over 3 percent.

S&P 500                         1,093.67                               +24.08                           +2.25%
The S&P 500 posted its largest gain since July 7, as all ten of its index sectors closed in the black.  AT&T gained over 2 percent after announcing that its 2Q profits beat analyst estimates, while the KBW Bank Index rose nearly 4 percent on a positive quarterly profit release from Fifth Third.  Shares of Xerox and 3M Co. climbed 7 percent and 3 percent, respectively, after each company boosted its full-year revenue forecast.

NASDAQ                        2,245.89                             +58.56                           +2.68%
Shares on the tech-heavy Nasdaq posted the largest gain among major U.S. indices, as Microsoft announced fourth-quarter earnings that topped analyst estimates.  Furthering bullish momentum for the technology sector was Qualcomm, which added over 8 percent after raising its 2010 profit forecast and reporting better-than-expected third quarter sales.

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

Dow

U.S. Stocks Rebound As Traders Look Towards Bernanke Speech

U.S. Session Key Developments

•    Market Participants Await Fed Bernanke’s Semiannual Senate Address Tomorrow
•    Housing Starts Fall in June to Lowest Level Since October
•    Crude Oil Rallies For Second Day, Gold Rebounds Nearly 1 Percent

U.S. stocks rallied today, erasing an initial slide following worse-than expected housing starts and building permits data.  Investors looked past the data and towards Federal Reserve Chairman Ben Bernanke’s Senate address tomorrow, speculating that the Fed Chairman would announce new plans to help revive the economy.  The positive sentiment helped boost equities, driving the S&P 500 over 1 percent higher to 1083, while the Dow Jones Industrial Average gained 0.7 percent to 10229.  One rumor circulating regarding Bernanke’s speech tomorrow, is that the central bank plans to cease paying interest to private bank reserves currently being held at the Fed.  This maneuver would, in theory, encourage banks to lend out that money into the real economy because there would be no payout for holding it as reserves within the Fed.  Such a move could provide a major boost to asset prices and help ward off deflationary forces that many economists see as problematic in the current economic environment.

The Fed rumors had an immediate impact on commodities, as energy and precious metal prices moved higher on the session.  Crude oil rallied 1.1 percent to $77.44, while gold rose 0.8 percent to $1192.  As for Treasuries, the 2-year and 10-year yields declined 1 basis point each to 0.576 percent and 2.948 percent, respectively.  The 30-year yield was unchanged at 3.978 percent.

DJIA 30                         10,229.96                              +75.53                         +0.74%
The broad-based Dow Industrial Average rallied for a second day as twenty-three of its thirty bluechip stocks closed higher.  Home Depot led the index with a 3.1 percent gain, while retailer Walmart and aluminum giant Alcoa rose over 2.5 percent each.  IBM was the biggest laggard, declining 2.5 percent on weak 2Q earnings, while Pfizer and Johnson&Johnson dropped over 1 percent each.

S&P 500                         1,083.48                               +12.23                           +1.14%
The S&P 500 posted the largest gain among the major U.S. indices today, as nine of its ten sectors closed higher on the day.  Health care stocks were the lone exception, but their losses were trumped by a 3 percent rise in basic materials shares and at least 1.5 percent gains for industrials, consumer goods, and energy stocks.  Gold and copper miner Freeport McMoRan rallied over 5 percent to boost basic materials, as investors speculate on further quantitative easing from the Federal Reserve.

NASDAQ                        2,222.49                             +24.26                           +1.10%
Shares on the tech-heavy Nasdaq rallied as technology shares gained 1.2 percent.  Shares of search engine giant Google gained over 3.3 percent on the day, while Apple rebounded from a sour two weeks, closing 2.6 percent higher.

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

Dow

Global Equities Slump as U.S. Confidence Hits Eleven-Month Low

U.S. Session Key Developments

•    University of Michigan Consumer Confidence Falls to Lowest Level Since August 2009
•    Consumer Prices Decline in June for Third Consecutive Month
•    Japanese Yen Rises to a 2010 High Versus Greenback

U.S. stocks posted their worst day since June 29, following weakness in foreign markets and an unexpectedly poor consumer confidence reading from the University of Michigan.  The S&P 500 shed 2.8 percent to 1064, continuing the bearish momentum that began with a 2.8 percent plunge for Japan’s Nikkei 225 overnight.  The main catalyst for risk aversion during the U.S. session was the University of Michigan’s confidence indicator, which showed that consumer confidence unexpectedly fell from 76.0 to 66.5 in July, its lowest reading in eleven months.  The reading showed that a record-low share of Americans expect their incomes will rise in the next 12 months, making a strong rebound in consumer spending seem unlikely.

As for commodities, the risk sell-off led to a third consecutive decline in crude oil prices as well as declines in precious metals despite their “safe haven” qualities.  NYMEX Crude fell 0.9 percent to $75.87, while COMEX gold shed 1.3 percent and COMEX silver dropped 2.7 percent to close at $1192 and $17.85, respectively.  The U.S. Dollar Index, on the other hand, ended a three-day skid, while the Japanese Yen gained against all of its major cross-currencies.  U.S. Treasuries also rallied, as 10-year bond yields fell to 2.923 percent.

DJIA 30                         10,097.90                              -261.41                         -2.52%
The broad-based Dow Industrial Average fell for a second day as all thirty shares on the index closed in the red.  Bank of America plunged 9.1 percent to lead the descent, on news that the bank’s second quarter revenues fell short of analyst expectations.  Other stocks falling sharply on the Dow were American Express, General Electric, and Home Depot, which fell over 4 percent each.

S&P 500                         1,064.88                               -31.60                           -2.88%
The S&P 500 gave back all of its gains this week, as financials plunged 4 percent and industrial, basic materials, and consumer services dropped over 3 percent each.  Seventy-one of the largest seventy-two S&P companies by market cap closed lower, with Goldman Sachs being the lone exception after settling its pending SEC lawsuit after hours yesterday.  Overall, the S&P index is down 4.5 percent year-to-date.

NASDAQ                        2,179.05                             -70.03                           -3.11%
Shares on the tech-heavy Nasdaq posted the largest loss among major U.S. indices as technology shares declined over 3 percent.  Google plunged 6.9 percent after the internet search giant’s second quarter earnings missed analyst estimates, while Research in Motion, Cisco, and Dell dropped over 4 percent.

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

Dow

U.S. Equities Reverse Morning Losses, Goldman Sachs Settles SEC Suit After Hours

U.S. Session Key Developments

•    Goldman Sachs Pays Record $550 Million to Settle SEC Suit
•    Financial Reform Regulation Passes Following 60-39 Senate Vote
•    Initial Jobless Claims Fall to Lowest Level Since August 2008

U.S. stocks managed to overcome weakness in Asia and Europe today, as the S&P 500 rallied to its highest closing level since June 21.  Initially, the index fell to 1080 as a better-than-expected jobless claims report failed to overcome weakness in foreign equities overnight.  The S&P then traded flat for most of the day until the bulls found their footing in the last 30 minutes, pushing the S&P to a 1096 close.  Overall, investors appeared more confident about the fate of the U.S. financial sector, as JPMorgan Chase beat its 2Q earnings estimates and financial regulation finally found the 60 votes needed to pass the Senate floor.  Although some analysts believe the financial reform bill could reduce bank profits, many realize that Wall Street avoided a “tougher” bill and the current bill’s passage provides clarity to investors.  Furthering bullish sentiment in financial shares, was a rumor that Goldman Sachs would be settling its SEC lawsuit with the U.S. government after trading closed.  Forty minutes after close, the SEC announced that Goldman agreed to pay a record $550 million and change its business practices to settle claims that it misled investors in collaterized debt obligations linked to subprime mortgages.  Goldman Sachs acknowledged it made a “mistake” and that marketing materials for certain financial instruments had “incomplete information.”

As for the economic docket, initial jobless claims fell to 429,000 in the week ended July 10, the lowest level since August 2008 and better than the expected reading of 438,000.  Continuing claims, on the other hand, rose to nearly 4.68 million in the week ended July 3, worse than the 4.44 million expected reading.  Also disappointing investors was a drop in Empire Manufacturing from 19.57 to 5.08 in July and a decline in the Philadelphia Fed Index from 8.0 to 5.1 in the same month.  Also released this morning were wholesale prices, which fell 0.5 percent in June, signaling a lack of inflationary pressures in the current economic environment.

DJIA 30                         10,359.31                              -7.41                         -0.07%
The broad-based Dow Industrial Average closed lower for the first time since July 2, as a 2.1 percent decline in Travelers and a 1.7 percent drop in Bank of America shares weighed on the index.  Overall, ten of the thirty index stocks closed in the red.

S&P 500                         1,096.48                               +1.31                           +0.12%
The S&P 500 was the lone major U.S. index to close higher today, thanks to strong gains for utilities and consumer services.  Nextera Energy and American Electric rose over 1 percent each to lead utilities, while Target shares rose 2.3 percent to boost consumer services.

NASDAQ                        2,249.08                             -0.76                           -0.03%
Shares on the tech-heavy Nasdaq dipped slightly lower on today’s session, although technology stocks closed up 0.03 percent.  Blackberry-maker Research in Motion gained over 1.4 percent to lead the major tech stocks, while shares of NetApp also added over 1 percent.

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

Dow

U.S. Equities Extend Winning Streak on Earnings Optimism

U.S. Session Key Developments

•    Alcoa Beats Expectations to Open Earnings Season for DJIA Companies
•    Small Business Confidence Declines to Three-Month Low
•    Dollar Index Falls to Lowest Level Since May 4

U.S. stocks followed their European counterparts higher today on investor optimism following a better-than-expected Alcoa earnings report.  The S&P 500 gained for a sixth consecutive session, rising 16 points to 1095.  The Alcoa release came out just after market close on Monday and showed per share profits of 13 cents, better than the consensus 11 cents per share that analysts expected.  This release helped boost U.S. equity futures overnight, but positive investor sentiment was tested throughout the session by poor economic releases.  Just prior to market open, the NFIB announced its Small Business Optimism reading fell from 92.2 to 89.0 in June, a three-month low and significantly below the 91.2 expected reading.  In the afternoon, the U.S. government announced its 21st consecutive monthly budget shortfall of $68.4 billion, although the reading was better than economists predicted.  Other news released during the trading session was that the U.S. trade deficit unexpectedly widened to $42.3 billion in May from $40.3 billion in April and that the IBD/TIPP economic optimism reading declined from 46.2 to 44.7 in July.

Despite the poor set of economic figures, investors extended their recent appetite for risk, driving equities and commodities higher.  Crude oil posted its largest gain since June, rising nearly 3 percent above the $77 per barrel level, while gold and silver futures gained over 1 percent each to $1213 and $18.25, respectively.  The bullish move in crude was likely attributable to the Alcoa earnings, as executives at the aluminum giant forecast growing global demand and an improved economic outlook going forward.  As for currencies, the Euro posted its biggest gain against the U.S. Dollar since June 10, pushing the EURUSD exchange rate to $1.2724, its highest closing level since May.  The U.S. Dollar Index fell nearly a full percent to 83.518, its lowest reading since May 4.  Looking ahead, tomorrow’s session could find direction from the advanced retail sales release at 8:30 AM ET, while all eyes will be on earnings releases from JPMorgan Chase, Bank of America, and Citigroup on Thursday and Friday.

DJIA 30                         10,363.02                            +146.75                         +1.44%
The broad-based Dow Industrial Average traded higher across the board, led by banks and basic materials shares, which increased nearly 2 percent each.  Alcoa’s positive positive earnings report helped boost the basic materials sector, while investors appeared confident that earnings releases from JPMorgan Chase, Citigroup, and Bank of America could boost bank shares later this week.  JPMorgan Chase gained 3.2 percent, while Bank of America added 3 percent.

S&P 500                         1,095.34                               +16.59                           +1.54%
The S&P 500 rallied over 16 points as financials, consumer services, and basic materials gained over 2 percent each.  Overall, 95 percent of S&P stocks traded higher and all ten index sectors finished the day in the black.  The index closed above 1095 for the first time since June 22.

NASDAQ                        2,242.03                             +43.67                           +1.99%
Shares on the tech-heavy Nasdaq posted the largest gain among major U.S. indices, despite a modest 1.5 percent move in technology stocks.  The sector was boosted by a 5 percent gain from Baidu and 3 percent gains for Research In Motion and Yahoo!  Shares of Apple, on the other hand, fell over 2 percent.

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

Dow

Global Equities End Longest Rally in Eleven Months

U.S. Session Key Developments

•    Asian, European, and U.S. Stocks Close Lower On the Day
•    U.S. Existing Home Sales Unexpectedly Decline in May
•    Dollar Rallies Against Euro and Commodity Currencies

Stocks sank across the board today, sending the MSCI World Index lower by 1.4 percent to end its longest winning streak in eleven months.  The world index, which had closed higher in each of the prior ten sessions, declined as U.S. existing home sales disappointed and new concerns arose regarding the BP oil spill.  Initially, U.S. stocks actually traded higher to begin their session, but investor optimism was blunted by news that existing home sales unexpectedly fell 2.2 percent to a 5.66 million annual rate in May, following an 8 percent rise in the month prior.  The weak data spurred investor concerns over the strength of the economic recovery and evidenced that further weakness in housing remains possible.  Furthering investor uncertainty was a report from the Obama administration that said it will appeal a federal judge’s ruling to lift a six-month moratorium on deepwater drilling.  The news pushed shares of BP, Transocean, and Halliburton lower by at least 2 percent each.  As for commodity prices, crude oil closed the day down 0.4 percent to $77.53 a barrel, while gold rallied slightly to close above the $1240 level.  Concerned investors continued to seek out the yellow metal for its “safety” qualities and also purchased U.S. dollars in favor of the euro and commodity currencies.  The U.S. Dollar Index rallied for a fourth time in five days, closing at 86.106, its highest level since June 14.

DJIA 30                        10,293.52                           -148.89                         -1.43%
The broad-based Dow Industrial Average dropped over 1 percent on the day as twenty-seven of the thirty index stocks closed in the red.  Aluminum giant Alcoa was the worst performer on the index, dropping over 3.6 percent, while Boeing, Home Depot, and Caterpillar fell over 2.4 percent.

S&P 500                         1,095.31                               -17.89                            -1.61%
The S&P 500 posted the largest decline among major U.S. indices as industrials, utilities, and commodity-related shares fell over 2 percent each.  Prospects of the Obama administration appealing a court decision to lift the moratorium on deepwater drilling drove shares of Chevron, ConocoPhillips, and STO down at least 2 percent each.

NASDAQ                        2,261.80                            -27.29                          -1.19%
Shares on the tech-heavy Nasdaq showed weakness today as all ten of its sectors closed in the red, including technology shares which fell over 0.7 percent.  Cisco and Applied Materials fell over 1.5 percent on the session, while Apple shares managed to gain 1.1 percent.

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

Dow

U.S. Equities Reverse Sharply in Last Hour of Trading

U.S. Session Key Developments

•    Reports Surface that Chinese Officials are Reviewing Euro-Zone Debt Holdings
•    Durable Goods Orders and New Home Sales Beat April Expectations
•    Euro Approaches Four-Year Low Versus Greenback

Entering the final hour of trading, U.S. stocks appeared set to advance following a strong durable goods report and better-than-expected home sales in April.  A concerning report out of China, however, quickly reversed investor sentiment, causing the Dow Jones Industrial Average to plunge 100 points in the final forty-five minutes of trading.  It was the third consecutive decline for the index which fell to 9974, its lowest close since a 100-point dip on February 8 sent the index to 9908.  Initially, equities showed strength as strong economic data in April gave investors hope that the U.S. economy may avoid the difficulties that currently plague Europe.  Purchases of new homes beat expectations and rose to a two-year high in April, while durable goods rose 2.9 percent in the month, the best reading since January.  The economic readings, coupled with equities strength in Europe and Asia, helped boost U.S. stocks for much of the day and sent commodity prices higher across the board.  Crude oil futures rose nearly 3 percent to close above the $70 level and gold futures jumped over 1 percent to $1212.  Around 3:15 PM in New York, however, U.S. equities took a turn for the worst following a Financial Times report on China’s holdings of European debt.  The report stated that Chinese officials have been meeting with foreign bankers in recent days to review the country’s holdings of European sovereign debt in light of the region’s fiscal difficulties.  The report derailed investor confidence in the Euro-zone economy, causing a sharp reversal in U.S. equities and pushing the euro near a four-year low against the U.S. dollar.  The Dollar Index closed higher as a result, settling at a 14-month high of 87.30.

DJIA 30                        9,974.45                          -69.30                       -0.69%
The Dow Jones Industrial Average posted the largest decline among major U.S. indices as 22 of the 30 bluechip stocks closed in the red.  Leading the decline were McDonald’s and American Express which dropped 2 percent each, followed by Verizon and Chevron stock which fell at least 1.4 percent on the day.  On the upside, Disney rallied 2.3 percent and Merck gained 1.1 percent.

S&P 500                       1,067.95                            -6.08                        -0.57%
The broad-based S&P 500 slumped for a second time this week, led by declines in telecommunications shares and consumer goods.  Sprint Nextel led the decline in telecom stocks, dropping over 7 percent, while Verizon and Leucadia shares fell over 1 percent.  Weakness in consumer goods was heavily influenced by a 2.6 percent drop in PepsiCo shares, as well as a 1 percent decline for Coca-Cola and Procter & Gamble.

NASDAQ                      2,195.88                           -15.07                       -0.68%
Shares on the tech-heavy Nasdaq fell for the third consecutive day as technology shares dropped over 1 percent.  Microsoft, the most heavily-weighted company in the tech sector, fell over 4 percent and was replaced by Apple as the world’s most valuable technology company by total market cap.  Microsoft closed the day with a market cap of $219.2 billion, trailing Apple’s $222.1 billion.

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

Dow

Global Equities Plunge Lower, Furthering Weekly Losses

U.S. Session Key Developments

•    Risk Sell-off Continues on Europe Concerns
•    VIX Volatility Index Rises to Highest Level Since March 2009
•    10-Year U.S. Treasury Yield Falls to Lowest of Year

Stocks around the globe extended their weekly decline as skittish investors continued to sell risky assets in favor of U.S. dollars and government bonds.  The Stoxx Europe 600 Index dropped 2.2 percent during European trading hours, while the S&P 500 index fell nearly 4 percent during U.S. trading.  Investors also sold off commodities across the board, driving oil prices below $66 a barrel intraday and gold below $1200 an ounce at day’s end.  The risk sell-off led to major inflows for “safer” government debt, driving down the yields of U.S., German, French, and U.K. bonds.  Ten-year U.S. Treasury yields fell 16 basis points to 3.213 percent, the lowest of the year.  As for currencies, the sell-off of “commodity currencies” continued as the Australian Dollar and New Zealand Dollar each fell over 2 percent against the greenback.  The aussie has been especially weak in recent trading, tumbling nearly 7 percent against the U.S. dollar since Monday.  Overall, market participants remained fearful and uncertain, concerned that Greece’s economic woes may spread to other European nations, ravaging the region’s economy in the process.  The VIX volatility index was a clear indicator of market uncertainty, rising over 10 percent today to its highest level since March 2009.

DJIA 30                     10,068.01                        -376.36                       -3.60%
The Dow Jones Industrial Average fell over 3 percent as all thirty index stocks closed in the red.  Bank of America and Alcoa were the biggest laggards, plummeting over 6 percent each, while shares of General Electric fell over 5.7 percent.  Overall, the index has shed 3.45 percent for the year.

S&P 500                       1,071.59                            -43.46                        -3.90%
The broad-based S&P 500 slumped for a fourth time in five sessions as financials and basic materials shares fell over 4.5 percent each.  The major U.S. investment banks all fell in value, as shares of Morgan Stanley, Wells Fargo, and Citigroup dropped at least 4 percent each.  As for basic materials, Freeport-McMoRan and Peabody Energy each fell 6 percent.

NASDAQ                      2,204.01                           -94.36                       -4.11%
Shares on the tech-heavy Nasdaq posted the biggest loss among major U.S. indices as tech stocks declined nearly 4 percent on the day.  Research in Motion was the biggest loser of the ten most heavily-weighted tech stocks on the index, dropping over 5 percent, while shares of Apple, Dell, and Yahoo! declined over 4 percent each.

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

Dow

U.S. Equities Fall After German Ban on Short Selling

U.S. Session Key Developments

•    Germany’s BaFin Regulator Announces Temporary Ban on Naked Short Sales
•    Crude Oil Tumbles Beneath $70 a Barrel, Gold Declines Over 1 Percent
•    Euro Falls Below $1.22 For First Time Since April 2006

U.S. stocks tumbled lower following an announcement from Germany’s BaFin financial-services regulator that said it will place a temporary ban on naked shortselling and naked credit-default swaps of euro-area government bonds.  The ban, which began at midnight in Germany, will also prevent short sales of ten banks and insurance companies.  The announcement had a dire effect on risk appetite, as U.S. stocks reversed their initial gains and commodities closed lower across the board.  Both the Dow Jones Industrial Average and S&P 500 fell over 1 percent on the day, while crude oil fell nearly 1 percent to close under $70 a barrel and Comex gold futures shed over 1 percent to $1214 an ounce.  Already skittish investors feared that the BaFin announcement to ban short selling could indicate further bearish news awaits in the euro zone.  The BaFin announcement also triggered further euro weakness, driving the sixteen-nation currency below $1.22 for the first time since April 2006.  Speculation swirled that the German short sales ban could be an indication of further euro deterioration behind the scenes that market participants may not be aware of.  Overall, market action remains choppy and unpredictable, as investors attempt to weigh the impacts of euro zone fiscal instability on the broader markets.  The VIX volatility index was a clear indicator of market uncertainty, rising 8 percent today to its highest level since May 7.

DJIA 30                     10,510.95                        -114.88                       -1.08%
The Dow Jones Industrial Average dropped over 1 percent as twenty-nine of the thirty index stocks closed lower on the day.  American Express was the biggest index laggard, falling 3.3 percent, while Boeing and Intel shed over 2 percent each.  Wal-Mart Stores was the only Dow stock to close in the black, as shares rallied 1.8 percent after the retailer announced a 10 percent jump in quarterly profit for Q1.

S&P 500                       1,120.80                            -16.14                        -1.42%
The broad-based S&P 500 slumped for a third time in four days as investor concern over Europe’s debt crisis led to a 2.8 percent plunge in the financial sector.  Financials opened the day flat, but swung to a loss during afternoon trading as Wells Fargo and U.S. Bancorp fell over 4 percent each.

NASDAQ                      2,317.26                           -36.97                       -1.57%
Shares on the tech-heavy Nasdaq posted the largest loss among major U.S. indices as tech stocks plummeted 1.5 percent.  Marvell Technology Group fell over 3 percent to lead the decline, while Intel and Chinese search engine Baidu dropped over 2 percent each.

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

Next Page »