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Risk Assets Continue to Decline


Today's financial recap and tomorrow's financial outlook.

The S&P 500 (INDEXSP:.INX) rose in the early going before selling off and finishing down for the third consecutive day. While there wasn't an identifiable piece of news pushing the action, the Street is anxiously awaiting Ben Bernanke's press conference next week, during which it is believed that he may begin to taper the monthly $85 billion monthly bond purchasing program. The consistent pop-and-drop action we've seen each morning this week may indicate that traders are aggressively reducing market exposure in contrast to what we saw earlier in the year when market participants bought every dip.

The major Asian and European indices were also in the red. Greece was a notable decliner after MSCI (NASDAQ:MSCI) cut the Mediterranean nation from developed country to emerging-market status due to a failure to meet criteria regarding securities borrowing and lending facilities, short selling, and transferability.

Elsewhere in international news, influential asset manager PIMCO announced this morning that there is a 60% chance of a global recession in the next three to five years.

Over in commodities, crude inventories increased by 2.5 million barrels last week, a drastic change from the 6.7 million barrel decrease during the week prior. Crude finished the day up 0.7% to just of $96.

Gold reversed its three-day downward trend, finishing up 1% on the day; bonds sold off as US Treasury yields continued their ascent.

Financial stocks were fairly weak on the day, with the Royal Bank of Scotland Group (NYSE:RBS) dropping more than 3% after CEO Stephen Hester announced that he will be stepping down from his position later this year. Likewise, yoga apparel maker Lululemon Athletica Inc (NASDAQ:LULU) again fell sharply on fallout from its recent announcement that its CEO would be stepping down.

Tomorrow's Financial Outlook

The weekly jobless claims report will be released tomorrow morning at 8:30 a.m. EDT. Initial claims are expected to come in at 350,000.

US retail sales will be released at 8:30 a.m. EDT tomorrow. The consensus month-over-month increase is 0.5%. Last month, retail sales came in at just 0.1%. US import and export prices will also be released tomorrow at 8:30 a.m. EDT. Exports are expected to have risen 0.1% and imports are expected to be flat.

The minutes from the latest Bank of Japan meeting will be released tomorrow night at 7:50 p.m. EDT.

Twitter: @Minyanville

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