YAHOO [BRIEFING.COM]: Sellers
reclaimed control of the stock market after it had put together solid
back-to-back gains. The change in tone came amid renewed concerns about
contagion in Europe and disappointing nonfarm payrolls data.
Stocks entered Friday with a
weekly gain of more than 1%, but that was dashed with this session's rout,
which saw the S&P 500 drop more than 3%. That gave the stock market a
weekly loss of more than 2% -- its fourth weekly loss of more than 1% in six
weeks.
Market participants sold
stocks en masse upon learning that officials from Hungary stated that economic
conditions in their country are grave and that talk of default is not an
exaggeration. What's more, the country does not plan to put austerity measures
in place, leading many wonder whether the European Union (EU) will have to
provide a bailout.
Though Hungary uses the forint
instead of the euro as its currency, the country's troubles make for a
manifestation of the fears spawned by the tenuous fiscal and financial
conditions throughout Europe. In turn, the euro dropped a precipitous 1.7% to
set a new four-year low of $1.1956.
Trade was also hurt by news
that nonfarm payrolls for May increased by 431,000, which is well below the
500,000 that many had expected. Even higher numbers had been whispered in some
circles, making disappointment over the number all the more significant.
Ultimately, the smaller-than-expected increase in payrolls overshadowed news
that the unemployment rate made a surprise move to 9.7% from 9.8%.
There really weren't any other
headlines to act as catalysts for trade. In turn, market participants were
focused on the negative. Of the 500 components in the S&P 500, only
one -- Cephalon (CEPH 59.11, +0.33) -- managed to muster
a gain. Weakness in the rest of the market led the benchmark index to one of
its worst performances this year and its lowest close since February.
Continued fears stemming from
Europe, a flight to safety in the U.S. dollar and a May jobs report falling
short of heightened expectations led to a sharp sell-off this session. Equity
markets are once again flirting with session lows. In turn, commodities lost
2.4%, as the dollar is currently up about 1.0%.
Crude oil was a primary victim
of the sell-off. The July contract traded steadily lower throughout the
session. It closed down 4.2% at $71.51 per barrel after bouncing off the $71
level just before the close of the pit trade.
Silver traded much like an
industrial metal this session. It traded sharply lower, much like copper and
nickel prices. The July contract lost 3.5% to close at $17.30 per ounce.
Gold, natural gas and sugar
futures were the only the commodities in the CRB commodity index to trade
higher. Gold was the beneficiary of a flight to safety. It closed modestly
higher, up 0.6% at $1217.20 per ounce. Meanwhile, natural gas extended
yesterday's rally. It closed 2.3% higher at $4.82 per MMBtu.
Such sharp selling pressure
caused the Volatility Index, often euphemistically dubbed the "Fear
Gauge," to surge more than 20%. It closed at its highest level of the
week.
There was plenty participation
behind this session's selloff. Specifically, trading volume on the NYSE
surpassed 1.6 billion shares, which is comfortably above the 50-day average of
roughly 1.4 billion shares. This session's declining volume outnumbered
advancing volume by more than 130-to-1.
Amid this session's carnage,
Treasuries fared extremely well. As such, the benchmark 10-year Note spiked
more than one point to drop its yield is below 3.20%.
Gold was also a beneficiary of
a flight to safety. It closed pit trade with a 0.6% gain at $1217.20 per ounce.
Gold wasn't the only commodity
to find favor, though. Natural gas prices climbed 2.3% to settle pit trade at
$4.82 per MMBtu as the energy component extended its surge from the prior
session.
Advancing Sectors: (None)
Declining Sectors: Industrials (-4.6%), Financials (-4.0%),
Materials (-3.9%), Consumer Discretionary (-3.8%), Energy (-3.5%), Tech
(-3.2%), Utilities (-3.0%), Health Care (-3.0%), Consumer Staples (-2.6%),
Telecom (-2.3%) DJ30 -324.06 NASDAQ -83.86 NQ100 -3.4% R2K -5.0% SP400 -4.1%
SP500 -37.95 NASDAQ Adv/Vol/Dec 300/2.30 bln/2372 NYSE Adv/Vol/Dec 289/1.63
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