Nervous Markets Look To Bernanke For Relief
– The major U.S. index futures are pointing to a lower opening on Friday, with sentiment worsening following the release of a report showing smaller than initially estimated growth for the second quarter. The spotlight is likely to be on Federal Reserve Chairman Ben Bernanke’s Jackson Hole address and any comments suggesting that the Fed may step in on a potential setback to economic growth may produce only muted reaction, as the markets have discounted measures that can bring a quicker relief.
U.S. stocks retreated sharply on Thursday following a 3-day advance, as skittish investors sold stocks on the pretext of a weak jobless claims report. The major averages opened modestly higher but receded in early trading and fell sharply until late morning trading. Thereafter, the averages moved roughly sideways, closing down sharply for the session.
The Dow Industrials lost 170.89 points or 1.51 percent before closing down 11,150 and the S&P 500 Index ended at 1,159, down 18.33 points or 1.56 percent. Meanwhile, the Nasdaq Composite Index retreated 48.06 points or 1.95 percent before ending at 2,420.
Twenty-eight of the thirty Dow components closed lower, with Travelers (TRV), 3M Co. (MMM), Caterpillar (CAT) and Cisco Systems (CSCO) among the worst decliners. On the other hand, Bank of America (BAC) climbed 9.44 percent.
Among the sector indexes, the NYSE Arca Airline Index fell 3.58 percent, the NYSE Arca Biotechnology Index slid 2.27 percent, the NYSE Arca Oil Index declined 2.35 percent, the Philadelphia Semiconductor Index ended down 2.71 percent and the Philadelphia Oil Service Index moved down 2.24 percent. Meanwhile, the NYSE Arca Gold Bugs Index added 1.97 percent.
After the sharp retreat in late July, the Dow Industrials has been trading in a range for about 3 weeks now. The advances seen early this week triggered some buying interest in the markets, with the index rising close to challenging its 21-day MA. However, with yesterday’s retreat, the index has moved further away from the MA. The violation of the 10,461 and 10, 447 levels to the downside or the 10,447 and 11,461 levels to the upside could result in breaking out of this directionless phase.
Commodity, Currency Markets
Crude oil futures are receding $1.28 to $84.02 a barrel after advancing $0.14 to $85.30 an ounce on Thursday. Gold futures are currently rising $9.30 to $1,772.50 an ounce. In the previous session, the precious metal rose $5.90 to $1,763.20 an ounce.
Among currencies, the U.S. dollar is trading at 76.6253 yen compared to the 77.464 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.4398 compared to yesterday’s $1.4379.
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