Instead, Thursday's swings have highlighted some of the big economic pitfalls that may hold their attention heading into 2010. The past 24 hours have seen fresh reminders of the challenges facing governments around the world as they try to strike a fine balance between avoiding inflation and propping up key parts of their respective economies to keep the recovery going.
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,308, -132.86, -1.27%) was recently down 89 points, or 0.9%, to 10,351.72. The Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,180, -26.86, -1.22%) fell 1%. The Standard & Poor's 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,096, -13.10, -1.18%) slipped 0.8%, led by a 1.8% slide in its basic-materials sector, which suffered from the pullback in commodity prices. All the S&P's other sectors posted declines as well, with the financial and consumer sectors falling more than 1% each.
"This is pure risk retrenchment that we're seeing," said strategist Jack Ablin of Harris Private Bank, which has recently grown more cautious about adding to its exposure to U.S. stocks.
Alluding to 14-month highs that major indexes had hit a few days before Thursday's slump, he added: "The market is probably fairly valued right now, with enough momentum to perhaps carry it into expensive territory at some point. But it can't stay there for long."
Traders said worries about the prospects for earlier interest-rate increases in the U.S. have spread, beginning with the currency markets, since Wednesday afternoon, when the Federal Reserve acknowledged improvement in the U.S. employment picture. Buying of dollars continued overnight as overseas traders reacted to the news, then spilled into New York trading. The U.S. dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.50, -0.20, -0.25%) was recently up 0.8%.
Such rallies in the currency tend to make items traded globally in dollar terms, including commodities, more expensive. For the moment, a stronger dollar also is bad for major U.S. companies that have come to depend heavily on exports to fast-growing overseas economies for a greater share of their profits.
Gold contracts were down $32.70 to $1,103 per ounce. Oil contracts fell 43 cents to $72.23 a barrel in New York. The broad Dow Jones-UBS Commodity Index was off 1.2%.
Among the big basic-materials names suffering from the commodity sell-off were Newmont Mining Corp. /quotes/comstock/13*!nem/quotes/nls/nem (NEM 48.04, +0.41, +0.86%) , off 5.1%; Freeport McMoRan Copper & Gold Inc. /quotes/comstock/13*!fcx/quotes/nls/fcx (FCX 76.59, +0.63, +0.83%) , off 3.7%; and U.S. Steel Corp. /quotes/comstock/13*!x/quotes/nls/x (X 48.95, +0.22, +0.45%) , off 1.4%. A 1.2% decline in Chevron Corp. /quotes/comstock/13*!cvx/quotes/nls/cvx (CVX 76.97, +0.19, +0.25%) hurt the energy sector, though Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 68.41, +0.19, +0.28%) managed to eke out a 0.3% rise.
The Dow Jones Industrial Average /quotes/comstock/10w!i:dji/delayed (INDU 10,308, -132.86, -1.27%) was recently down 89 points, or 0.9%, to 10,351.72. The Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 2,180, -26.86, -1.22%) fell 1%. The Standard & Poor's 500 Index /quotes/comstock/21z!i1:in\x (SPX 1,096, -13.10, -1.18%) slipped 0.8%, led by a 1.8% slide in its basic-materials sector, which suffered from the pullback in commodity prices. All the S&P's other sectors posted declines as well, with the financial and consumer sectors falling more than 1% each.
"This is pure risk retrenchment that we're seeing," said strategist Jack Ablin of Harris Private Bank, which has recently grown more cautious about adding to its exposure to U.S. stocks.
Alluding to 14-month highs that major indexes had hit a few days before Thursday's slump, he added: "The market is probably fairly valued right now, with enough momentum to perhaps carry it into expensive territory at some point. But it can't stay there for long."
Traders said worries about the prospects for earlier interest-rate increases in the U.S. have spread, beginning with the currency markets, since Wednesday afternoon, when the Federal Reserve acknowledged improvement in the U.S. employment picture. Buying of dollars continued overnight as overseas traders reacted to the news, then spilled into New York trading. The U.S. dollar index /quotes/comstock/11j!i:dxy0 (DXY 77.50, -0.20, -0.25%) was recently up 0.8%.
Such rallies in the currency tend to make items traded globally in dollar terms, including commodities, more expensive. For the moment, a stronger dollar also is bad for major U.S. companies that have come to depend heavily on exports to fast-growing overseas economies for a greater share of their profits.
Gold contracts were down $32.70 to $1,103 per ounce. Oil contracts fell 43 cents to $72.23 a barrel in New York. The broad Dow Jones-UBS Commodity Index was off 1.2%.
Among the big basic-materials names suffering from the commodity sell-off were Newmont Mining Corp. /quotes/comstock/13*!nem/quotes/nls/nem (NEM 48.04, +0.41, +0.86%) , off 5.1%; Freeport McMoRan Copper & Gold Inc. /quotes/comstock/13*!fcx/quotes/nls/fcx (FCX 76.59, +0.63, +0.83%) , off 3.7%; and U.S. Steel Corp. /quotes/comstock/13*!x/quotes/nls/x (X 48.95, +0.22, +0.45%) , off 1.4%. A 1.2% decline in Chevron Corp. /quotes/comstock/13*!cvx/quotes/nls/cvx (CVX 76.97, +0.19, +0.25%) hurt the energy sector, though Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 68.41, +0.19, +0.28%) managed to eke out a 0.3% rise.
No comments:
Post a Comment