Wednesday, June 30, 2010

Stocks slammed by global slowdown fears

NEW YORK (CNNMoney.com) -- Stocks tumbled Tuesday, with the Dow falling as much as 326 points and the S&P hitting an 8-month low after a big drop in consumer confidence and signs of a bigger slowdown in the global economy.

Investors plowed into the safety of government debt, sending the 10-year note yield below 3% for the first time in 14 months.

Dow Jones industrial average (INDU) dropped 268 points, or 2.7%, after having earlier lost as much as 326 points. The Nasdaq (COMP) composite fell 85 points, or 3.9%.

The S&P 500 (SPX) slid 33 points, or 3.1%, falling to a fresh 2010 low of 1035.18 before recovering a little to close at 1041.24. It was the lowest close since November and could bring in more selling in the next few days, according to technical market pros.

Stocks slipped at the open on global concerns but the selling picked up steam after the release of the Consumer Confidence index for June. Confidence slumped to 52.9 from 62.7 in May, the Conference Board reported, with the decline reflecting worries about the labor market and economic outlook. Confidence was expected to fall to 62, according to economists surveyed by Briefing.com.

Concerns about the job market and economy have dragged on stocks on and off for the last two months, with the major gauges falling into a correction after hitting rally highs in late April. A correction is a plunge of at least 10% off the highs. As of Tuesday's close, the S&P is off 14.6% from the highs of late April.

Tuesday's woes were sparked by a weak reading on Japanese export demand and household spending and a revised reading on Chinese leading economic indicators. In Europe, a fresh round of protests by Greek citizens opposed to government austerity measures kept worries about Europe's ability to cut its debt front and center.

The euro, something of a proxy for European debt worries, fell.

"Between euro worries, some notes of a slowdown out of Asia and a bad consumer sentiment number, there are very few reasons for stocks to rise, and plenty for them to fall or flatten out," said Karl Mills, president and chief investment officer at Jurika Mills & Keifer.

"The largest concern on a broad level remains the issue of debt, both in Europe and the U.S.," he said.

Stocks ended a choppy session lower Monday after leaders of the G-20 nations agreed to both continue to promote economic recovery and to cut deficits in half by 2013. The group of 19 countries and the European Union met at a summit last weekend in Toronto.

On the move: Declines were broad based, with all 30 Dow issues falling, led by Boeing (BA, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), IBM (IBM, Fortune 500) and United Technologies (UTX, Fortune 500).

A variety of financial stocks slumped, with the KBW Bank (BKX) sector index off by 3.5%. Components JPMorgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Wells Fargo (WFC, Fortune 500) all lost 4%, while Citigroup (C, Fortune 500) fell 6%.

World markets: European markets stumbled across the board, with Britain's FTSE 100 losing 3.1%, Germany's DAX giving back 3.3% and France's CAC 40 falling 4%.

Asian markets slumped. Japan's Nikkei fell 1.3%, Hong Kong's Hang Seng slid 2.3% and China's Shanghai Composite slumped 4.3%.

Housing market: Home prices rose 3.8% in April versus a year ago, according to the S&P/Case-Shiller Home Price Index of 20 major housing markets. That was a bigger jump than expected, with economists looking for a climb of 3.4% after a boost of 2.3% in March. Home prices also rose 0.8% in April from March levels.

However, prices remain off over 30% from the peak.

Companies: Electric car maker Tesla Motors debuted on the Nasdaq under the ticker TSLA, rising 12% from its IPO price late Monday.

Tesla priced its shares at $17 each, above the $14 to $16 target range, allowing it to raise over $226 million in the IPO.

Currency: The euro slumped 0.7% versus the dollar but remained above the four-year low of $1.188 hit earlier in the month. The dollar was down 1.1% versus the yen.

Commodities: U.S. light crude oil for August delivery fell $2.83 to settle at $75.94 a barrel on the New York Mercantile Exchange.

COMEX gold for August delivery gained $3.60 to $1,242 an ounce.

Bonds: Treasury prices rallied, lowering the yield on the 10-year note to 2.97% from 3.03% late Monday. Treasury prices and yields move in opposite directions.

Market breadth: Market breadth was negative and volume was moderate. On the New York Stock Exchange, losers beat winners 11 to one on volume of 1.6 billion shares. On the Nasdaq, decliners topped advancers eight to one on volume of 2.58 billion shares. To top of page

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