Risks are moving back to center stage as financials continue to drag markets lower. As we’ve stated here for a long time, there has never been a bull market when financials haven’t been with the overall trend. But you say these are unique times and we can ignore this? Not a chance—financials are at the core of our market woes.
Markets responded poorly when Fitch issued a report stating that while U.S. bank ratings are lower overall, and seem to have stabilized some, the risk of a “negative shock” remains high. This is a eurozone exposure warning which claims victims just as quickly as MF Global. Given the rapidity of failures, it’s no wonder investors sold stocks immediately.
Earnings news continued with Target (NYSE:TGT) reporting better than expected earnings but again featured 6% fewer shares outstanding. Also in retail Abercrombie & Fitch (NYSE:ANF) disappointed taking the stock lower by roughly 14%.
Economic data featured better Industrial Production and a lower CPI reading although the much watched “core” rate was higher.