Wednesday, February 18, 2009

Market Reflections 2/17/2009

It was concern over Japan and Europe that sank the U.S. markets on Monday. A 3.3 percent fourth-quarter contraction in Japanese GDP deepened concern over the global recession as did talk of European bank failures. Treasury International Capital data showed renewed foreign investment but not Japanese investment in Treasuries, another result of contraction in Japan. Data here showed record lows for the Empire State manufacturing report, data suggesting that the recession for the manufacturing sector continues to deepen in the first quarter.

President Obama signed the latest stimulus bill into law and, along with the Treasury Secretary, will offer tomorrow a foreclosure prevention plan for the housing sector. Other data in the session included another rock bottom reading for the housing market report from the nation's homebuilders. Bank stocks were heavily sold in the session as were shares of GM which was due after the close to report its status to the government. The Dow industrials ended at their lows, down 3.8 percent to 7,552.

Money moved further into safety including once again into gold which ended about $30 higher at $970. The dollar gained more than 2 cents against the euro to $1.2605 while yields fell sharply in the Treasury market with the 10-year down 26 basis points to 2.63 percent. Oil fell further with the March contract going off the board at $34.95. April WTI ended 8% lower at $38.55.

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