U.S. Indexes Drops 2% on EU Worries; Oil, Gold Slide 2.5%

Bikram Pandey
28 Sep, 2011
New York City

The jittery market indexes traded volatile as investors recalibrate hopes of quicker euro zone resolution. The slow moving political process is expected to lag the market expectations and indexes dropped 2% in New York. Europe lurches towards fiscal integration that may widen the rift among members.

[R]4:40 PM New York – The jittery market indexes traded volatile as investors recalibrate hopes of quicker euro zone resolution. The slow moving political process is expected to lag the market expectations and indexes dropped 2% in New York. Europe lurches towards fiscal integration that may widen the rift among member nations.[/R]

U.S. indexes lost momentum and turned negative in the afternoon on the lack of specific details on the euro zone bail out plans. Durable goods orders unexpectedly fell 0.1% in August.

The market had set up for a sharp fall after a sudden surge of 7% in two days on the hopes that political process moves faster and Greek debt crisis may be contained.

In New York trading, three popular indexes turned jittery and declined more than 2% at close. Asian markets are expected to open lower tomorrow.

In the U.S. earnings news, Accenture fourth quarter net income increased 9% to $611.9 million and Darden first quarter net fell to $106.6 million. Family Dollar fourth quarter net income rose 8% to $79.8 million and Paychex first quarter net income rose 13% to $148.9 million.

The European indexes traded sideways and Finland approved the setting up of the rescue fund and separated the issue of the collateral demand for Greece. Germany and Austria are expected to approve the measure this week and five other member nations have still to approve the measure.

European Commission proposed a financial transaction tax which was resisted by the Netherlands, Sweden and the UK.

French economy stagnated in the second quarter. Germany’s import price annual inflation eased in August. Hungary''s unemployment rate remained unchanged during June to August and Sweden’s economic confidence index and Italian manufacturing confidence fell in September.

The UK indexes fluctuated after home prices in England and Wales and Irish retail sales dropped in August. The UK corporate credit availability remained unchanged in the third quarter. LCH.Clearnet entered into exclusive talks with LSE.

Stocks in Japan barely budged in cautious trading. Resources linked stocks and banks edged higher on the hopes of a resolution to the Greek crisis.

Australian stocks rebounded at the opening but pared gains in the afternoon. Nufarm reported a higher net loss but also said net profit before charges rose 68%. Australia approved the purchase of Foster’s Group by SABMiller.

Commodities, Bonds and Currencies

The 10-year U.S. bond yield closed at 2% and 30-year U.S. bond decreased to 3.09%.

The U.S. dollar decreased to $1.354 to one euro and closed lower against the Japanese yen to 76.54 yen.

Immediate delivery futures of Texas crude oil dropped $3.46 to $80.99 a barrel and futures of natural gas decreased 0.07 cents to $3.75 per mbtu and gasoline price fell 4.56 cents to 264.99 cents a gallon.

In metals trading, copper decreased 26.55 cents to $3.17 per pound, gold plunged $43.00 or 2.6% to $1,609.50 per ounce and silver decreased $1.55 to $29.98.