Dow Jones Industrial Average fell into a coma

Dow Jones - a new week promises new challenges

In brief: Dow Jones Industrial Average may not withdraw from the minus in May 2010, the reasons for this are more than enough.

Dow Jones Industrial Average could not withstand many internal and external economic challenges in major markets. Dow Jones loses confidence with each new day. Long a blind eye to the problem of European investors are not able to, and returning fears about the financial stability of the region increase U.S. indices deep into the minus.

Players now fear that the reduction in government spending of European governments would affect the rate of recovery of the world economy, and – more important – are worried about the fact that the debt crisis can fully address the developing countries of Eastern and Central Europe, because they depend heavily on exports to Western Europe state. If economists are still questioning the implementation of the pessimistic scenario, the participants in the currency market this is no doubt: the euro against the dollar fell following Friday’s trading up polutoraletnego minimum. But even the strengthening U.S. currency failed to cause the flow of investment in U.S. shares, and 14 May only became more expensive bonds – against the background of the flight in the risk-free assets. Even favorable published statistics on the U.S. economy could not change the dynamics of quotations on the stock market in a positive direction. In particular, at 17:15 Moscow time the Federal Reserve System (FRS) the USA has published data on the volume of industrial production in April 2010. According to which the index rose by 0,8%, up 0.2 percentage points above forecasts of economists. Improved indicator was the most significant in the last seven months. In addition, on Friday became aware of the seventh consecutive monthly increase in volume of retail sales in the U.S. – up to April index value increased by 0,4%, twice surpassing market expectations. The importance of high level of consumption for the process of restoring the American economy is difficult to overestimate. Attention players, however, was completely focused on foreign issues, and, unfortunately, is not irrational.

As a result of trading on May 14 the Dow Jones index fell by 162.79 points (-1.51%) – up to 10,620.16 points, NASDAQ down on 47.51 points (-1.98%) – up to 2,346.85 points, S & P lost 21,75 points (-1.88%) and amounted to 1,135.68 points. Banking stocks are usually sensitive to economic problems, did not disappoint “bears” and Friday: capitalization of JPMorgan Chase & Co. decreased by 2,25%, Bank of America Corp. – On 3,14%, Goldman Sachs Group Inc. – On 0,98%, Wells Fargo & Co. – On 3,14%, US Bancorp – by 3,3%, The Bank of New York Mellon Corp. – On 0,93%, Morgan Stanley – to 1,96%, and Citigroup Inc. – On 2,69%. It seems that the shares of leading U.S. banks for a long time will not be in favor with investors because the value of securities under pressure then the expectation of the collapse of the global financial system, promoted by the Bills on crushing the largest banks, the legal action by seeking to blame for the crisis, and more, all these factors together. Stronger than other members of the financial sector suffered two leading global payment systems Visa Inc. and Mastercard Inc. Their quotes fall on 9,88% to 8,55% respectively. The reason sales was successfully passed in the Senate vote on the need to force the bar to reduce the maximum level of fees on transactions with debit cards. The measure is clearly a populist, and it is unlikely it will help boost the volume of financial transactions and purchases, but now the profit of both payment system, it obviously can be reduced. Experts Stifel Nicolaus downgraded the papers with Visa to “buy” to “hold” because they are not sure that the process of adoption of this measure will be stopped.

Technology company, on Friday made a significant contribution to the anticipatory drop in the NASDAQ. In quotes Apple Inc. pressed the message that the Taiwanese manufacturer HTC smartphones applied to the Commission on International Trade in U.S. to stop selling the most popular products Apple – iPhone, iPod and iPad, as an American corporation, the assertions HTC, violates a number of Taiwanese patents. Hardly be expected that HTC requirements will be met, but the risks are risks, and investors react to them very sensitively. Apple claims to have, and Finnish manufacturer Nokia. In addition, on 14 May it became known that, in terms of percentage of smartphones sold up to the I quarter of 2010. Apple with its iPhone lost to Google Inc., Promote products with the operating system Android. Following the session shares Apple Inc. fell to 1.76%, and Google Inc. – Only 0,66%. Poor paper looked at the largest U.S. online stores eBay Inc. (-1,9%) And Amazon.com Inc. (-2.23%), Which could lose more if it were not for post of analysts Caris & Company to start the analysis of these companies with attribution recommendation to “buy”. True outsiders on May 14 were steel companies, fell into disgrace because of the next coil to reduce the cost of industrial metals and steel. Fears about the decline in demand from European and Chinese economies is not weakened. On Friday, shares of United States Steel Corp. failed on 5,66%, Arcelor Mittal – on 6,89%, Southern Copper Corp. – On 3,05%, AK Steel Holding Corp. – On 3,69%, Alcoa Inc. – On 3,44%, Freeport-McMoRan Copper & Gold Inc. – On 2,78%. Quotes of gold, traditionally has a negative correlation with the dynamics of stock markets on Friday were again able to update the historical maximum (1,249.7 U.S. $ / ounce), which ultimately resulted in the increase in value of the securities Barrick Gold Corp. (1.81%) and Newmont Mining Corp. (0.96%), which in recent weeks serve as protective. Reduction in the U.S. market on May 14 continued in full swing – investors are still preparing for the summer holidays. Although the current levels and not high enough to pass the beneficial long positions and go on vacation with good humor, willingness to take risks with players works with every day. In the coming weeks and probably months, markets will remain very vulnerable, because within a few months, investors held their breath, waiting for the approval of financial assistance to Greece, but now with each passing day it becomes increasingly clear that this one trillion dollars will not save. In the short term market, the reduction potential is preserved, and the Dow Jones index, if not collapse to lows of 6 May, then to the level of 10360 points must necessarily fall. In particular, the new wave of oil price collapse (barrel Brent crude fell back to a mark of 77.5 dollars per barrel.) Is not yet fully taken into account in the cost of oil and gas companies.

Ukrainian Globalist
2010-05-16 13:57, Economics.

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