US stocks ended with steep losses for second straight day on Thursday, 20 June 2013. Stocks were hit by fear that the Federal Reserve will scale back its bond buying later this year. Markets across the globe sold off after yesterday's comments from Federal Reserve Chairman Ben Bernanke were interpreted as a warning of an impending modification to the Fed's asset purchase program. Although the Fed Chairman qualified his statement by saying the economy must continue showing improvement before modifications can be made, investors looked past this condition and chose to focus on the potential timeframe instead.
For the day, the Dow Jones Industrial Average ended down 353.87 points, or 2.3%, to 14,758.32. It was the Dow's largest one-day percentage decline since November 2012, the day after the U.S. presidential election. The S&P 500 index dropped 40.74 points, or 2.5%, to 1,588.19. The Nasdaq Composite lost 78.57 points, or 2.3%, to 3,364.63.
All thirty Dow components ended lower led by Walt Disney and Intel. All 10 of the index's major industry groups ended lower, with consumer staples and utilities posting the biggest declines.
Fed Chairman Ben Bernanke at his press conference on Wednesday afternoon strongly hinted the Fed in the coming months will back off the accelerator on its monthly bond buying. After digesting the Fed news the market place reckons the Fed will start scaling back its monthly bond purchases (tapering) by the end of this year.
More raw commodity-market-bearish news came from China Thursday, as the HSBC flash PMI dropped to 48.3 in June from 49.2 in May. Any reading below 50.0 suggests contraction. Reports said the China manufacturing data on Thursday was the weakest in months.
The U.S. dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.8% on Thursday.
Also Read
Regarding economic data expected at Wall Street, the initial claims level increased from an upwardly revised 336,000 (from 334,000) for the week ending June 8 to 354,000 for the week ending June 15. The consensus expected the initial claims level to increase to 340,000.
The Conference Board's Index of Leading Indicators increased 0.1% in May, down from an upwardly revised 0.8% (from 0.6%) gain in April. The consensus expected the index to increase 0.2%.
Manufacturing activity improved in the Philadelphia region as the Philadelphia Fed's Business Outlook Survey increased from -5.2 in May to 12.5 in June. That was the highest reported Philly Fed Index since April 2011. The consensus expected the Philly Fed Index to increase to -0.2.
Existing home sales jumped above the 5.00 million mark for the first time since the homebuyer tax credit temporarily boosted sales in late 2009. Home sales rose from 4.97 million in April to 5.18 million in May. The consensus expected existing home sales to increase to 5.00 million.
Bullion metal prices ended substantially lower on Thursday, 20 June 2013 at Comex. Comex gold and silver futures prices ended the U.S. day session sharply lower, hit 2.5-year lows and set new daily lows. Gold for August delivery ended lower by $87.8 (6%) at $1,286.2 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. July silver ended lower by $1.8 (8.3%) at $19.82 an ounce on Thursday.
Crude-oil prices ended sharply lower on Thursday, 20 June 2013 at Nymex. Prices fell as the market grappled with a continued Chinese manufacturing slowdown and signals from the Federal Reserve that a reduction in monetary stimulus is in sight. Light and sweet crude for July ended lower by $2.84 (2.9%) at $95.4 a barrel on the New York Mercantile Exchange on Thursday.
More than 4.8 billion shares of New York Stock Exchange-listed shares traded hands, the second-largest volume day of the year.
Indian ADRs ended lower on Thursday. In the IT space, Infosys was down 2.8% and Wipro was down 2.3%. In the Banking space, HDFC Bank was down 4.5% and ICICI Bank was down 5.5%. In other space, Tata Motors was down 4.3%, and Sterlite was down 5.9%.
For tomorrow, no economic report is expected for the day.
Powered by Capital Market - Live News