Weekend Doubts Send Equities Down

[Excerpted from Bill Cara's Daily Report]

Weekend doubts and nervousness that perhaps economic growth is not really happening sent US equity markets plunging at the open, which immediately took Europe down hard as well.

At the closing bell on Monday in New York, the S&P 500 (979.73 -24.36 -2.43%), the DJIA (9,135.34 -186.06 -2.00%) and the NASDAQ Composite (1,930.84 -54.68 -2.75%) closed sharply lower. As on Friday, the usual ‘buy the dip’ traders did not appear.

Following a loss on Friday, the Toronto Exchange Composite (10,531.59 -316.42 -2.92%) and the Toronto Venture Board (1,159.82 -33.60 -2.82%) pulled back even more sharply on Monday as these indexes are more sensitive to oil and gold prices.

With a strong $USD, the contracts for Crude Oil ($WTIC 68.73 -0.87 -1.25%) and $GOLD (934.50 -14.20 -1.50%) stumbled for a second consecutive day.

In the US equity market, with the exception being Healthcare Providers, all sectors and industries were sharply lower, with an opening sell-off. The biggest losing sectors were Financial (XLF -4.2%), Basic Materials (XLB -3.8%) and Energy (XLE -3.2%). The biggest losing industry groups were REITs, Goldminers and Banks ($DJR -5.6% $XAU -4.6% $BKX -4.5%).

Although it seemed not to be the case, not all tickers were green Monday. US Bonds (TLT +1.48%) and Healthcare Providers ($RXH +0.5% IHF +1.5%) had money flowing into them, as did classic defensive stocks Coca-Cola (KO +0.47%) and Abbott Labs (ABT +0.90%). There were just two Cara 100 company stocks that lifted on the day: KO and Aetna (AET +4.8%). Managed care stocks made a gain as Pres. Obama is said to be signaling a compromise in his demands for a government mandated health insurance plan.

The biggest of the 98 Cara 100 losers were Brunswick Corp (BC -10.1%) Electronic Arts (ERTS -8.1%) and Tata Motors (TTM -7.6%).

With the market pull-backs on Friday and Monday, the US Dollar firmed on both days ($USD 79.30 +0.49 +0.62%). Again, the Yen (105.83 +0.48 +0.46%) tightened up even faster, as risk-takers disappeared. The Euro (140.82 -1.22 -0.86%), British Pound (163.46 -1.93 -1.17%) and Canadian Dollar (90.27 -0.74 -0.81%) dipped sharply against the $USD.

The US long bond ($USB 119.67 +0.89 +0.75%) took on gains as a safe haven play. Treasury yields dropped for the 30-year (4.348 -0.58 -1.32%), 10-year (3.491 -0.67 -1.88%) and 5-year (2.419 -0.79 -3.16%) instruments. The Treasury bill yield (0.170) was unchanged.

Earlier Tuesday, the Austral-Asian markets closed mixed. Japan’s Nikkei 225 (3,071.6 -0.47%) and Australia (4,385.9 -0.28%) were down, while Hong Kong (20,306.3 +0.84%), Shanghai (2,910.9 +1.40%) and India (15,035.3 +1.69%) lifted.

Then the French CAC (3,438.3 6:41AM ET +0.55%), German DAX (5,228.9 6:26AM ET +0.52%) and FTSE 100 (4,684.3 6:26AM ET +0.85%) managed to gap higher at the open before running into selling.

In precious metals trading Tuesday morning, the spot (cash) market was as follows for: gold (938.07 +0.63 +0.07% 06:43am ET); palladium (268 +1 +0.37% 06:06am ET); platinum (1229 -4 -0.32% 06:06); and silver (14.12 +0.07 +0.50% 06:43am ET), respectively.

Sept. Euro:Dollar futures (1.4122 +0.0040 +0.28% 06:29am ET) were a tad stronger this morning. So were Sept. Crude Oil futures (67.725 +0.975 +1.46% 06:24am ET).

US Sept. DJIA equity market futures were higher (9176 +56 +0.61% 06:29am ET).

Comments

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Aug 20 06:16 AM