Global stocks continue to drift downward as Europe
dominates the headlines. US stocks shrug
off positive economic reports and focus on Fed meeting minutes from yesterday
as well as news out of Europe. Stocks
tumbled yesterday afternoon as the FOMC’s most recent meeting minutes released signaled
the Fed may refrain from more quantitative easing, causing investors to fear a
lack of liquidity in the markets. That
fear continued into today’s session despite strong US economic reports. According to ADP, private sector employment
rose 209,000 in March, for the 26th month of gains. The report for February was also revised
upward to 230,000 from a prior estimate of 216,000. The Institute for Supply Management said its
services index fell to 56.0% last month from 57.3% in February. The services sector accounts for ¾ of output
for the US economy. The ISM index has remained
above the 50 level for 27 straight months.
A reading above 50 indicates expansion.
US Treasury Secretary, Timothy Geithner also said in a speech to the
economic club of Chicago that household debt is down 17% relative to income
since before the crisis. In Europe,
stocks were down over 2% this morning on concern over Spain’s debt
situation. In a bond auction today,
Spain sold 2.59 billion euros of bonds, less than their target max of 3.5
billion euros, driving yields higher in a disappointing bond auction. Worries about Spain’s deficit and rising
unemployment sent stocks tumbling. The
European Central Bank (ECB) also announced that they will leave its key lending
rating unchanged at a record low of 1%.
Asian markets were also hit today following a reported trade deficit in
Australia. Commodities were down with
oil down 2.06% to 101.87 and gold down 3.11% to 1620. The US dollar strengthened as the markets
were down. The 30 yr. mortgage rate
climbed to 4.03% while the 10 yr. treasury yield dipped slightly to 2.24%. The CBOE Volatility Index rose 8% to 16.92.
