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  • Proprietary Trading Weekly Market Recap For Friday, Apr. 11, 2014 0 comments
    Apr 11, 2014 7:03 PM

    Stocks Slump As Investors Hammer Nasdaq

    The equity markets continued to experience robust volatility which was on display on Thursday with the Nasdaq dropping nearly 3%. The bio-tech sector as well as high flying momentum stocks saw market liquidations late in the week after holding support and building on gain during the first three days of this past week. The main US data point was the release of the FOMC's meeting minutes, which showed a more dovish side of the Fed. For the week the S&P 500 was down 2.65% while the Nasdaq was the big loser declining 3.1%.

    The rollercoaster ride began as stock soared after the Federal Reserve released its FOMC meeting minutes which showed that the central bank had no intention of tightening rates, a far cry from what was expected. Yellen's comments post her first press conference led investors to believe that the central bank was considering a rate hike imminently following the end of the bond purchase program but this does not seem to be the case.

    The minutes reveal no intention by any Fed member to tighten rates any time prior to late 2015. Federal Reserve will buy more bond in April than initially conceived when the last quantitative easing program was announced. Additionally, some regional Fed presidents, like Chicago's Evans, are pushing their forecast for the first hike into 2016

    U.S. regulators voted to raise the leverage ratio at banks to 5-6% of their total assets, well above the Basel III standard of 3%, which will now force the eight largest U.S. banks to hold another $68 billion in loss-absorbing capital. The banks affected include JPMorgan, Citigroup, Bank of America and Goldman Sachs. The eight firms have until January 1, 2018 to comply with the new rule.

    Oil prices held steady as OPEC's oil output tumbled to its lowest level this year in March. Production by the Organization of the Petroleum Exporting Countries fell by over 500,000 a day last month to 29.6 million barrels a day according to the group's monthly oil market report. A steep drop in Iraq's oil output of nearly 300,000 barrels a day led the decline.

    On the employment front, the number of Americans filing unemployment claims dropped to a 300,000 last week, down 32,000 from the previous week, according to the Labor Department. The last time the number dipped below 300,000 was in May 2007. The previous week's level was revised up by 6,000 from 326,000 to 332,000. Economists surveyed had estimated a new claims total of between 310,000 to 330,000. The four-week moving average fell 4,750 to 316,250. That's the lowest since late September.

    On Friday the labor department reported that the producer-price index rose 0.5% in March. It rose 0.6% excluding the volatile categories of food and energy. Economists surveyed had expected the index to rise a more modest 0.1%, and predicted a 0.2% increase excluding food and energy. The index was up 1.4% in March from a year earlier, the biggest year-over-year increase since last August.

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