As a result of the Greek upheaval and negativity, the various stock index futures traded sharply lower today. The Dow nosedived 350 points, the S&P fell off the cliff by 43 points, and the Nasdaq plummeted 122 points today.
Breadth numbers were horribly negative at a 1 to 6 downside ratio. Every one of the 30 Dow components was lower…continuing the trend of these stocks going downward together. The financials and consumer discretionary were hit hardest along with industrials.
The weekend developments in Greece took most everyone by surprise. Greece closed its banks and imposed capital controls, measures that will most likely drive it further into recession. The Greeks may even leave the Euro behind. The Prime Minister called for a July 5th referendum on the austerity demanded by its creditors. However, polling shows that the majority of Greek people want to remain in the Euro currency zone. As a result, the E.C.B. froze the level of emergency funding available to Greek banks yesterday.
Economic reports continued to show an improving economy here in the USA. May pending home sales rose for the fifth straight month and the June Dallas Fed Manufacturing Activity Index declined by much less than expected.
Bond yields were lower with the 10-year at 2.35% for the largest price gain since last October. The Euro put in an astounding performance today. One could be led to believe that something is going to be resolved with the European economic chaos. The “explanation” for the Euro’s success today is the optimistic viewpoint that even a Greek exit is not so important. The ECB has the ability to stabilize conditions in the rest of the Eurozone if they choose to do so.
Gold was up a bit at $1,179 and crude oil was down again to a three-week low of $58.66. This is a favorable development for some vacationers as the summer driving season is upon us.
If you thought that the Greek events were the big ones for this week…think again. On Thursday we will receive the always important monthly jobs report. Last month was a blockbuster report with the May numbers at a very large 280,000. June is supposed to show a gain of 235,000.
In addition, these economics items are coming this week: Tuesday – June Chicago Purchasing Managers’ Survey, June Consumer Confidence, April CaseShiller Home Price Index and the June ISM Milwaukee Index; Wednesday – ADP estimate for Thursday’s jobs report, May construction spending, June ISM Manufacturing Survey; Thursday – the jobs report plus the June ISM New York Empire Manufacturing Survey and May factory orders.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes. Donald Selkin is the Chief Market Strategist at National Securities Corporation, member FINRA/SIPC, (NSC) and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, Associated Press.