Market Recap: Stocks Decline as Euro Drops Below $1.30
- Posted on December 14, 2011 at 4:34pm by
Becket Adams
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Markets closed down on Wall Street today:
- Dow -1.10 percent
- S&P -1.13 percent
- Nasdaq -1.55 percent
- Oil -5.20 percent
- Gold -5.20 percent
On the commodities front:
- Oil (NYSE:USO) dropped to $94.93 a barrel
- Gold (NYSE:GLD) falling to $1,576.60 an ounce
- Silver (NYSE:SLV) fell 7.68 percent to settle at $28.86
(Related: Merkel’s Cabinet Backs Bank Rescue Fund)
Today’s markets were down because:
1) Dollar: The dollar strengthened today as the euro declined to an 11-month low. The stronger dollar dragged down commodities priced in the U.S. currency. The drop in commodities hit shares of companies in the energy and materials sectors, including Caterpillar, Alcoa, and Exxon Mobil, taking a toll on the Dow.
OPEC’s decision to increase its production cap also took a toll on oil prices, which in turn hit companies like Chevron Corp. and BP.
2) Euro: Investors remained nervous today about the euro-zone debt crisis and increasingly tight credit conditions for banks across Europe, pushing the euro down below $1.30. While most EU leaders have agreed in theory to form a fiscal compact aimed at strengthening budgetary discipline, investors are worried that implementing the agreement could prove legally and politically difficult, as EU members ratifying the treaty would be essentially signing over their fiscal sovereignty.
3) Debt. U.S. stocks joined a global slump as the cost of insuring against default on European sovereign debt approached record highs. Italy had to pay the most in 14 years to sell five-year bonds in an auction today. The yield on Ireland’s 10-year bonds rose to 8.77 percent today, up from 8.06 percent a month earlier. Spain’s 10-year bond yielded 5.69 percent and the yield on Germany’s benchmark 10-year bund was 1.92 percent.
[Editor's note: the above is a cross post that originally appeared on Wall St. Cheat Sheet.]
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Gypsy123
Posted on December 15, 2011 at 12:43pmNo stocks for me
Report Post »garyM
Posted on December 14, 2011 at 7:52pmI don’t ever buy any Euros!
Report Post »Commonsensical
Posted on December 14, 2011 at 6:23pmWhen the Euro crashes, the Dollar can’t be far behind. The Dollar will see a temporary boost as investors shift from the failing Euro… Then when the IMF tries to bail out Europe, largely with American Dollars, it all comes crashing down. Trust the Obozo Administration to make every single poor choice along the way and bring our nation to financial ruin. Time to invest in Silver & Lead, in small, self-propelled denominations… How many emergency services, police, fire, etc., do you think will stay on the job when they stop receiving checks, and their families are in danger at home?
Report Post »AvengerK
Posted on December 14, 2011 at 5:20pmGreat Britain is refusing to give up economic sovereignty to Brussels and the EUreaucrats are furious with the UK right now. The UK wisely chose not to debase the pound and adopt the Euro. So now the EUSSR is trying to find ways to punish Great Britain..time will tell on that outcome. European banks are digging deep now to maintain liquidity. They’ve nearly exhausted U.S. treasuries and are starting to utilize their gold reserves. Greece will default, likely Spain and Itally and Portugal will follow. The EU will fracture. Financial institutions are already testing the plumbing for a return to old European currencies. The one bright aspect of the U.S. economy these last few years has been in exports. When..not if.. the EU fractures our exports will get hurt. There is still the chance that domestically we’ll eject Obama and his anti-business administration in time to strengthen the job and business sector so that the blow is less formidable to us. If we had a competent party in charge these last few years along with a president who knew what he was doing..we’d be able to weather this turmoil in a much surer fashion. Unfortunately…we’ve been dealt the Joker card that is Obama.
Report Post »Mikev5
Posted on December 14, 2011 at 6:10pmI agree with all that you said and I say way to go Great Britain finally showing some common sense and some balls.
If the EURO falls all the better for the USA the EURO was kicking us around for fun soon no longer.
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