(As of 7:05 am PST)
Selling pressure resumed on Wall Street this morning
after yesterday’s frenzied session that saw the Dow shed 450 points before
finishing the day down 174 (1.1%).
Concerns over global growth slowdown are fueling the selling as data in
recent weeks suggest sluggish growth outlooks for China, Japan and most of
Europe. Adding to the mix yesterday are
emerging signs of deflation. Falling
commodity prices, most notably the drop in oil, and declining bond yields are
indications that inflation pressure is low if not deflationary. With the timing of the Fed’s exit of its
bond-buying stimulus program and plans to raise short term interest rates, the
risk of deflation and its implications on the economy have increased in recent
days. These concerns are overshadowing a
generally positive economic picture in the US. Today’s reports are quite
strong. Jobless claims fell to a 14 year low while reports on industrial
production and capacity utilization beat estimates for September. Earnings for
the most part have been upbeat today. Reports from Goldman Sachs, Delta Air
Lines, and Netflix grabbed headlines early while other big names are due to
report throughout the day. International markets are broadly lower as are most
commodity prices. Interest rates are flat at the moment while the US dollar is higher. Despite the positive US data, expect another volatile session in the equity markets.
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