While you were sleeping: Stocks fluctuate

Wednesday 9th June 2010

US stocks seesawed a day after the Standard & Poor’s 500 Index posted the biggest two-day drop since March 2009.

The American economic recovery was “moderate-paced,” given the depth of the recession, and the unemployment rate was likely to stay high “for a while,” Federal Reserve Chairman Ben Bernanke said last night in Washington.

In late trading, the Dow Jones Industrial Average rose 0.48% and the Standard & Poor’s 500 Index gained 0.23%. The Nasdaq Composite dropped 0.94%.

Among the most active stocks on Wall Street were Exxon Mobil Corp, Intel Corp, Nvidia Corp and LSI Corp.

Buyers selectively chose defensive sectors and those with higher US exposure. Bernanke also said the US economy seemed to have enough momentum to avoid a "double-dip" recession.

"It may be a play on US versus the rest of the world, where tech is probably the most export-oriented," Jack Ablin, chief investment officer of Harris Private Bank in Chicago, told Reuters.

Telecommunications services and consumer staples shares ranked among the top performers. AT&T, a Dow component, rose 2.1%.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’, dropped 4.05% to 35.09.

The Stoxx Europe 600 Index fell 1.1% to 240.06.

The UK’s FTSE 100 fell 0.81%, France’s CAC 40 declined 0.98% and Germany’s DAX dropped 0.62%.

Among the most active stocks in Europe were E.ON AG, RWE AG, BP Plc and Tesco Plc.

International views of the European Union have declined sharply. More than half of respondents in a Bloomberg survey believe the EU offers the worst investment opportunities, up from a third who said so in January, when Europe also ranked at the bottom.

Fitch said the UK needed to accelerate plans to reduce its budget deficit. The warning came one day after Prime Minister David Cameron told Britons to expect years of spending cuts, while the European Union pledged tougher sanctions on governments that break deficit rules.

US Treasuries fell as the government sold US$36 billion in three-year notes and demand eased for the relative safety of government securities.

US debt dropped after Bernanke’s comments on the recovery.

The Treasury will auction US$21 billion of 10-year notes tomorrow and US$13 billion in 30-year bonds the next day.

The yield on the current three-year security increased three basis points, or 0.03 percentage point, to 1.17% at 1.27pm in New York, according to BGCantor Market Data. The yield on the 10-year note rose three basis points to 3.17%.

The Dollar Index, which measures the greenback against a basket of six major currencies, slipped 0.05% to 88.36.

The euro rose as investors booked profits a day after the currency hit its lowest level against the US dollar since early 2006, and the pound fell after a ratings agency urged Britain to cut its deficit.

Against the US dollar, the euro rose above US$1.20 after tumbling to US$1.1876 on Monday, its lowest level since March 2006. Analysts said the market was still anxious about debt levels in several euro zone countries and debt auctions this week from Portugal and Spain.

In afternoon trading in New York, the euro gained 0.4% at US$1.1958. Analysts said it also saw support after euro zone ministers made final arrangements Monday to set up funds for countries facing debt problems. The euro gained 0.3% at 109.15 yen.

Sterling fell 0.4% to US$1.4407 after Fitch Ratings said the UK was facing a "formidable" fiscal challenge and said Britain's public debt ratio had climbed more quickly than those of othertop-rated sovereign credits.

The US dollar was flat at 91.26 yen. Earlier, new Japanese Prime Minister Naoto Kan chose a fiscal conservative as his finance minister.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 0.44% to 250.08.
Front-month US crude rose 44 cents to US$71.88 at 1.26pm EDT.

ICE Brent rose 9 cents to US$72.21.

US crude inventories were expected to have fallen for the second straight week as import volumes declined, Monday's Reuters poll of analysts said ahead of weekly stocks reports.

Industry group the American Petroleum Institute's inventory report arrives at 4.30pm EDT on Tuesday. The more closely watched data from the US Energy Information Administration arrives Wednesday at 10.30am EDT.

Gold hit a record US-dollar high above US$1,250 an ounce on concern over Europe's economic outlook.

Spot gold rose as high as US$1,251.20 an ounce, and was at US$1,246.80 an ounce at 1515 GMT against US$1,238.05 late on Monday.

US gold futures for August delivery hit a record US$1,254.50 and was later up US$8.40 at US$1,249.20 an ounce.

"The sovereign debt issue is a perfect thing for gold as a safe haven," VM Group analyst Matthew Turner told Reuters.

Businesswire.co.nz

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