Stocks open sharply lower to start the week as political
concerns out of Europe, disappointing data out of China, and a bribery scandal
at retail giant Wal-Mart send the markets into the red. The 3 major US stock indices, the Dow,
S&P, and Nasdaq were all down 1%-1.5% to start the week as concern about
global recovery weigh on the markets. In
Europe, the euro-zone preliminary (flash) composite purchasing managers index
(PMI) fell to 47.4 in April down from 49.1 in March. The manufacturing PMI component fell to a 34 month low, while
services PMI gauge fell to a 5 month low.
A reading below 50 on this economic indicator signals contraction. Also weighing on European markets, which were
down 2%-3% today, are political concerns out of France and the
Netherlands. France President Nicolas
Sarkozy came in second to socialist candidate Francois Hollande in a
first-round presidential poll over the weekend, becoming the 1st
incumbent to not lead in re-election.
Also, over the weekend, Dutch Prime Minister Mark Rutte signals his
preparation to resign after a weekend of disappointing budget talks. Dutch bond yields jumped over concern the
country could soon lose its AAA credit rating.
In China, preliminary PMI data shows another contractionary month. Flash PMI rose slightly to 49.1 in April
compared to 48.3 in March, a slight increase but still below the critical 50
level. Asian markets responded by shedding
0.5%. In the US, Dow component and
retail giant, Wal-Mart Stores led the broad market decline after the New York
Times reported that the Mexican subsidiary reportedly used bribery to expand
growth. Shares of Wal-Mart were down as
much as 5% to open. Oil prices fell
1.80% to 102.01 while gold also shed 0.82% to 1629.40. The US dollar strengthened while the 10 yr.
treasury yield slipped to 1.91%. 30 yr. mortgage
rates hit a record low at 3.85%. The
volatility Index (VIX) soared 15% to break over 20 at 20.10 at 8:00 am pacific.
