Stocks have been hit by a recent bout of selling pressure, which has taken the stock market to its lowest level in about 90 minutes. The action has left shares of Google (GOOG 536.06, -42.45) to drop through their session low so that they now trade at their worst level in six months.
Eases to C$0.9600/05 area in recent dealings, still amid light flows and seeming intent on testing recent lows at C$0.9595 that have underpinned in recent days. Talk of stops below C$0.9590. Break lower will target C$0.9585/80.
Stocks have stretched to fresh session highs. The move comes amid some relatively broad buying interest. However, financials have failed to return to the levels that they set in the early going. Instead, financials are up a moderate 0.4%.
Bank of America (BAC 13.00, -0.13) has become a burden to the financial sector after it had actually traded with strength in the early going. Volatility in shares of BAC come in the wake of news of an earnings miss for the most recent quarter and an announcement that the bank has reached an agreement on mortgage repurchases with Assured Guaranty (AGO 17.90, +3.73). The expiration of monthly options is likely adding to volatility.
The euro fell against the dollar and yen as concern the region’s debt crisis is getting worse pushed the extra yield investors demand to hold Greek 10-year bonds instead of German debt to a record 1,000 basis points.
“Increased worries about defaults in the periphery are weighing yet again on the euro and a reminder that we’re still not by any means at the end of this crisis,” said David Mann, New York-based head of research in the Americas at Standard Chartered. “It’s also been very tough to stay above the $1.45 level, which is a major psychological level for the market. There are suspected options barriers around that level.”
The yen rallied versus all of its major counterparts on demand for a refuge as China said inflation reached the fastest pace in more than two years, reviving concern the world’s second-largest economy will cool growth. The dollar dropped against the yen as a measure of inflation was lower than economists forecast.
U.S. consumer prices excluding volatile food and fuel costs rose 0.1 percent in March after an increase of 0.2 percent in the previous month, the Labor Department reported. That core figure increased 1.2 percent from a year earlier.
“Consumer prices don’t do much to change the steady outlook for Fed policy,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network.
The euro has gained 8 percent versus the dollar this year on bets accelerating inflation will prompt European policy makers to raise interest rates further even as nations such as Greece and Ireland try to reduce their debt burdens.
Stocks had made a strong upward push on the back of a stronger-than-expected consumer sentiment survey reading, but they have since drifted down from morning highs. The action has left the major equity averages to continue trading with mixed results.
Amid the sloppy trade seen this morning, Treasuries have rallied. The move has the yield on the benchmark 10-year Note down to 3.42%, which is only a couple of basis points above its 10-day low. Renewed strength among Treasuries comes after analysts at Moody's downgraded the debt of Ireland -- a move that has rekindled concerns about conditions among the less fiscally sound countries in the eurozone and its periphery.
Support 3: Chf0.8700
Current price: $1.6325
Support 3: $1.6180
Support 3: $1.4240
The preliminary Consumer Sentiment Survey for April from the University of Michigan came in at 69.6, which is greater than the 66.5 that had been expected. The preliminary reading for April is also greater than the 67.5 that was posted for the prior month.
Stocks have reacted positively to the news.
Advancing Sectors: Utilities (+1.2%), Health Care (+0.8%), Industrials (+0.6%), Financials (+0.5%), Materials (+0.4%), Telecom (+0.4), Energy (+0.1%)
Declining Sectors: Tech (-0.4%)
U.S. stocks were poised for losses Friday, as Google and Bank of America earnings disappointed investors.
"Obviously right now, investors are a little concerned," said Ethan Anderson at Rehmann in Grand Rapids, Mich. "You're seeing data out of China showing higher inflation and that puts more upward pressure on interest rates. Meanwhile, earnings reports haven't been horrible, but they have certainly not been incredibly impressive either."
Dow component Bank of America (BAC, Fortune 500) fell 1% in premarket trading after the bank fell short of analyst estimates when it reported first-quarter earnings of $2 billion, or 17 cents a share. Analysts were forecasting a 27-cent profit.
Like JPMorgan Chase (JPM, Fortune 500) earlier this week, Bank of America said losses from mortgage-related assets would continue to hurt its bottom line.
Google (GOOG, Fortune 500) shares also dragged on premarket trading, falling 5.7% early Friday. Late Thursday, Google reported a quarterly profit that rose from year-ago results but missed Wall Street forecasts.
Economy: The Consumer Price Index during March rose mostly in line with expectations. The CPI rose 0.5% on a monthly basis and the annual rate reached 2.7%.
Core inflation rose at a slowest rate than in February at 0.1% in March, below expectations of a 0.2% rise. In the last 12 months the Core CPI rose 1.2%.
Investors will get the University of Michigan's consumer sentiment survey for April.
Companies: Other companies reporting results on Friday included broker Charles Schwab (SCHW, Fortune 500) and toy maker Mattel (MAT, Fortune 500).
Empire State index topped expectations, but dollar holds tight. EUR/USD trades at $1.4413, GBP/USD - at $1.6340, USD/JPY - at Y83.17.
04:30 Japan Industrial output (February) final 1.8% 0.4% 0.4%
04:30 Japan Industrial output (February) final Y/Y 2.9% 2.8% 2.8%
09:00 EU(17) Harmonized CPI (March) final 1.4% 1.2% 0.4%
09:00 EU(17) Harmonized CPI (March) final Y/Y 2.7% 2.6% 2.4%
09:00 EU(17) Harmonized CPI ex EFAT (March) Y/Y 1.3% 1.1% 1.0%
09:00 EU(17) Trade balance (February) unadjusted, bln -1.5 -4.2 -14.8
09:00 EU(17) Trade balance (February) adjusted, bln -2.4 - -3.1 (-3.3)
The euro fell against the dollar, yen and pound after Moody’s Investors Service lowered Ireland’s credit rating, stoking concern that Europe’s debt crisis may worsen as Greece battles to avoid a bond restructuring.
The Moody’s cut Ireland to the lowest investment grade and indicated more downgrades may follow.
Europe’s currency fell to an almost one-week low against the dollar yesterday after Germany’s finance minister and Standard & Poor’s said Greece may need to restructure debt to avoid defaulting. Greece will announce more than 22 billion euros of deficit-reduction measures through 2014 today, according to Finance Minister George Papaconstantinou.
The euro has still gained 8% versus the dollar this year on bets accelerating inflation will prompt euro-area policy makers to raise interest rates, even as the so-called peripheral nations struggle to reduce their debt burdens.
The euro stayed lower even as a report showed inflation in the 17-nation euro-region accelerated more than forecast to 2.7% in March, the fastest pace in more than two years.
The European Central Bank raised its key rate last week to 1.25% from a record low 1% and indicated further increases may follow. The Fed has kept its target rate for overnight lending between banks at zero to 0.25% since December 2008.
The yen rallied after China said inflation reached the fastest pace in more than two years, spurring demand for a refuge.
China’s economy grew 9.7% in the first quarter, while consumer prices increased 5.4% in March from a year earlier. The median forecasts were for economic growth of 9.4% and inflation of 5.2%.
EUR/USD fell from $1.4500 to $1.4440. Rate remains under pressure.
GBP/USD holds within the $1.6310/70 range.
USD/JPY printed lows at Y82.90 before recovered to Y83.50. Currently rate holds around Y84.25.
The U.S. consumer-price index climbed 0.5% in March, matching the previous month’s reading, which was the biggest gain since June 2009, a survey showed before the Labor Department data today. Excluding volatile food and fuel costs, so-called core prices may have advanced 0.2% in March for a third month.
Fed Chairman Ben S. Bernanke last week said an acceleration in inflation is likely to be transitory. Fed Bank of Richmond President Jeffrey Lacker said yesterday the central bank should end its stimulus programs before inflation picks up.
Pierpont Securities says core infl has started rising, a reason to move up Fed's tightening timetable. Pierpont est Mar core CPI +0.2%.
EUR/USD holds around $1.4461 as it fails to hold onto the react gains seen after release of stronger than forecast EMU CPI. Earlier rate printed highs of $1.4475. Support seen back in place at the earlier low of $1.4441, with further interest seen at $1.4435/30.
EUR/GBP extends its corrective pullback to challenge reported support/demand around stg0.8830. The cross posted fresh intraday lows at stg0.8828. If rate can clear below this area seen allowing for a retest on Thursday's low at stg0.8808. Currently cross holds around stg0.8836.
Hang Seng -0.02% 24,008.07
The euro erased its decline against the dollar on speculation the sovereign-debt crisis in nations including Portugal and Greece will be contained.
The euro erased its drop as European Union Economic and Monetary Affairs Commissioner Olli Rehn said he’s “quite confident” the financial-aid package being negotiated for Portugal will result in the debt crisis being contained.
The dollar fell to its lowest level this month against the yen as U.S. initial jobless claims unexpectedly rose and producer prices advanced at a slower pace, encouraging the Federal Reserve to keep borrowing costs low. The euro slid earlier as concern Greece will have to restructure its debt pushed its bond yields to record highs.
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