Thursday, 17 May 2012

Stocks Drop on Europe, Manufacturing Data as Gold Rallies

Per Bloomberg on line :

"May 17 (Bloomberg) -- Stocks fell, dragging the Standard & Poor’s 500 Index to the lowest level since January, as investors speculated Spanish banks may have their credit ratings lowered and an American gauge of manufacturing trailed projections. Gold rebounded from its lowest level of the year.

The S&P 500 slipped 0.7 percent to 1,316.09 at 11:55 a.m. New York time and the Stoxx Europe 600 Index lost 1.1 percent to the lowest level since December. The yield on two-year Spanish debt jumped 10 basis points to 4.19 percent as borrowing costs increased at a debt auction. The Dollar Index advanced for a record 14th day. Oil was little changed near a six-month low, while gold futures surged 2.8 percent, the most since October.

Moody’s Investors Service is set to downgrade the credit ratings of Spanish banks later today, said two people with knowledge of the situation, who asked not to be identified because the decision hasn’t been announced. The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 5.8 in May. Economists said the gauge would rise to 10.

“It’s a double whammy,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, said in a telephone interview. His firm oversees about $333 billion of assets. “Not only do we have continued scary European news, we’ve got weak economic data in the U.S. today. We’re going to bounce around for a while.”

$3 Trillion Slump
The MSCI All-Country World Index lost as much as 0.7 percent to extend its retreat from this year’s peak to 10 percent.

More than $3 trillion has been erased from the value of equities worldwide this month as concern Greece will exit the euro curbed demand for riskier assets. The country faces a fresh election on June 17 that may boost parties opposed to the conditions of its international bailouts.

Other economic reports today showed U.S. jobless claims were unchanged at 370,000 in the week ended May 12, compared with the median forecast of 48 economists surveyed by Bloomberg News for a drop in claims to 365,000. The Bloomberg Consumer Comfort Index fell in the week ended May 13 to minus 43.6, a level associated with recessions or their aftermaths, from minus 40.4 in the previous period.

The S&P 500 has tumbled 7.1 percent from a four-year high in April as Greece’s failure to form a government returned investors’ focus to Europe’s debt crisis, while economic data trails estimates by the most in seven months. The Citigroup Economic Surprise Index for the U.S., which measures how much data is missing or beating the median estimates in Bloomberg surveys, slipped to minus 25.1 today and was minus 25.6 on May 10, the lowest since September 30.

Market Leaders
Caterpillar Inc., JPMorgan Chase & Co. and Home Depot Inc. fell at least 2.5 percent to lead declines in the Dow Jones Industrial Average, which slipped to its lowest level since Jan. 17.

Limited Brands Inc., owner of the Victoria’s Secret lingerie chain, fell 3 percent after forecasts disappointed investors. Wal-Mart Stores Inc., the world’s largest retailer, rose 5.1 percent after lower prices increased customer traffic. Sears Holdings Corp., the retailer controlled by hedge fund manager Edward Lampert, rallied 8.3 percent after reporting a profit.
Gold jumped the most since October as a four-day slump and speculation that the Federal Reserve will announce more stimulus for the U.S. economy boosted demand for the precious metal. The metal tumbled 3.7 percent in the past four sessions

Gold futures for June delivery rose 2.7 percent to $1,578.50 an ounce. A close at that level would mark the biggest gain for a most-active contract since Jan. 25. Yesterday, prices retreated to as low as $1,526.70, the lowest since Dec. 29.

The 10-year U.S. Treasury note yield decreased four basis points to 1.73 percent before the government sells $13 billion of similar-maturity inflation-protected debt. Minutes from the last Fed meeting showed yesterday some policy makers said further easing may be needed should the U.S. economy slow.


European Shares
Almost five shares dropped for each that gained in the Stoxx 600, which extended declines to the lowest level this year. Bankia SA plunged 14 percent, bringing this week’s decline to 31 percent, as El Mundo reported that customers have withdrawn 1 billion euros from accounts since the government took over the lender on May 9.

Markets in Switzerland, Norway, Sweden, Denmark, Finland, Austria and Luxembourg are among those closed today for the Ascension holiday.

The MSCI Emerging Markets Index was little changed near a four-month low, paring earlier gains of as much as 1 percent. The Shanghai Composite Index jumped 1.4 percent and Taiwan’s Taiex Index advanced 1.7 percent. Russia’s Micex Index lost 3.7 percent.

To contact the reporters on this story: Stephen Kirkland in London at skirkland@bloomberg.net ; Rita Nazareth in New York at rnazareth@bloomberg.net "

Regards
Steven

Steven Morris CA (SA)
Mobie : 083 943 1858

Fax: 086 671 2498

E-Mail: steven@global.co.za

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