Indexes on Wall Street Drop 1%; Gold Falls 3%

Bikram Pandey
04 Apr, 2012
New York City

U.S. stocks accelerated their declines in early afternoon and the Nasdaq dropped 1.7%. Banks, technology and industrials fell after the Fed took a wait and see approach and bond yields in Europe began rising again. Gold dropped 3% and oil declined 2%.

[R]4:00 PM New York – U.S. stocks accelerated their declines in early afternoon and the Nasdaq dropped as much as 1.7%. Banks, technology and industrials fell after the Fed took a wait and see approach and bond yields in Europe began rising again. Gold dropped 3% and oil declined 2%.[/R]

U.S. indexes dropped more than 1% despite private sector added more than 200,000 jobs in March and bond yields perked up in Europe.

Market declines accelerated in the afternoon trading as investors focused on valuations as the Fed takes wait and see approach. The Nasdaq index dropped as much as 1.7% and the S&P 500 index fell at the low by 1.2%.

In corporate news, 3G Capital sold 29% stake in Burger King for about $1.4 billion. Monsanto second quarter sales rose 15% and net surged 26% to $1.21 billion and the company lifted full year forecast. MSC Industrial second quarter net soared 21%. SanDisk lowered first quarter guidance on weak pricing and demand. Walgreen March sales fell.

The European indexes slumped after sovereign bond yields resumed their advances. The ECB held rates unchanged for the fourth straight month in April. Spain raised €2.6 billion at higher borrowing costs and Portugal offered its longest dated debt post bailout. Euro area retail sales fell in February.

However, Spain worries gripped market sentiment on both sides of the Atlantic as the yield on 10-year benchmark bonds rose to 4.3% from 3.38% and are expected to rise further at auctions in the next few weeks.

Spain’s Prime Minister Mariano Rajoy proposed €27 billion in deficit cuts and trim government deficit to 5.3% from 8.5% of GDP last year.

The budget calls for higher interest payments of €29 billion, up from €22 billion last year and matches the amount set aside to pay for plans and compensation for jobless as the unemployment rate surges to a record high of 23.6%.

The government also estimated that total national debt will increase to 79.5% this year from 68.5% of gross domestic product in 2011.

Stocks in Tokyo dropped sharply and the Nikkei index declined below 10,000 for the first time in three weeks as investor sentiment reversed. Fast Retailing plunged 6% after the largest apparel retailer reported less than expected 5.1% same store sales increase.

Australian exports declined 2% in February to $24.4 billion and imports fell 4% to $24.9 billion as consumers and businesses held back purchases. The dollar declined to a two-month low on the prospect of a rate cut next month.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond increased to 2.24% and 30-year U.S. bond edged higher to 3.38%.

The U.S. dollar edged down to $1.3129 to one euro and inched higher against the Japanese yen to 82.65 yen in New York trading after trading at a three-week low.

Immediate delivery futures of Texas crude oil decreased $2.31 to $101.70 a barrel and Brent crude futures fell $1.83 to $123.03. Futures of natural gas increased 0.001 cents to $2.18 per mbtu and gasoline price fell 4.72 cents to 334.82 cents a gallon.

In metals trading, copper fell 12.40 cents to $3.79 per pound, gold dropped $51.40 to $1,620.60 per ounce and silver declined $1.88 to $31.38.