Benzinga Market Primer Friday, June 8
Yesterday was a crazy session, with stocks opening up on the absolute highs and closing on the absolute lows. The Dow (NYSE: DIA) closed up .37%, the S&P 500 (NYSE: SPY) was flat, and the Nasdaq (NASDAQ: QQQ) lagged, closing down .48%. Markets opened higher on the Chinese rate cut, but after Bernanke quelled hopes of QE3, markets began to sell-off. Gold (NYSE: GLD) plummeted almost 3% yesterday on the news and so did silver (NYSE: SLV). The Fitch rate cut of Spain also did not help risk sentiment heading into the close.
Despite the Chinese rate cut, commodities lagged, with crude closing below $84 after touching $87. Nat gas also fell almost 6% yesterday. Markets may be fearing that the Chinese rate cut signals that the upcoming economic data may be weaker than initially expected. Banks also fell, with Morgan Stanley (NYSE: MS) falling over 3%.
Asian trade was pretty dull overnight, with major indexes falling initially on the risk-off sentiment, but then staying rather constant at those levels. In European trade, the Bank of France announced it is predicting Q2 French GDP growth of -.1%. Also, peripheral debt spreads over Germany widened, with Spain and Italian bond spreads moving about 20 and 10 basis points wider respectively. Italian industrial production collapsed last month, falling 1.9% month-over-month on expectations of a -.5% print.
Later, the rumors began. First, a rumor started circling that Spain is going to ask for a bailout this weekend, and according to Reuters, "Eurogroup conference call to take place on Saturday to discuss details – Two EU sources." A European Commission official said that Spain has not yet asked for aid.
For today's session, the data docket is pretty light. At 8:30, we get the trade numbers for April. The market is looking for a trade balance of -$49.5 billion following March's -$51.8 billion. Later, we get the wholesale inventory numbers. The market is looking for a gain of .4% following March's .3% gain. There is also Canadian data this morning that may trump US data. However, with the light data docket, most eyes will be looking for rumors from Europe about a Spanish bailout and any indication from Fed officials over further easing. On this note, the Fed's Kocherlakota is speaking at the University of Michigan's Ross School of Business.
Currently, futures are indicating a lower open. S&P futures are down about 8 points, Dow futures are down about 60, and Nasdaq futures are down about 11 points. European stocks are down around 1% across the board, with Spain (NYSE: EWP) being the notable out-performer. In currencies, the dollar (NYSE: UUP) is stronger across the board, and the dollar index is up almost 1% and is closing in on the 83 level.
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