Bond Market Mayhem
Today's financial recap and tomorrow's financial outlook.
US stock futures rose in pre-market trading after European and Asian markets stabilized overnight, with China firming after its central bank made a 400 billion yuan injection into the nation's banking system. This brought down China's overnight repurchasing rate substantially following yesterday's enormous spike.
Market participants remained frazzled by the recent heavy declines and the S&P 500 (INDEXSP:.INX) fell sharply, spurred on by rumors of liquidity problems within the US Treasury market. The benchmark 10-year US Treasury yield spiked again, breaking through 2.5%, which drove another decline in bonds -- as well as interest-rate-sensitive sectors like housing and utilities -- early on.
Then, in the early afternoon, the equity markets rallied hard on headlines indicating that the Fed may delay tapering if worsening financial conditions hurt the economy. Interestingly enough, that didn't do much to slow the carnage in bonds, suggesting that many folks aren't buying that story.
Following that bounce, the S&P 500 managed to say in the green to finish up 0.3% for the day.
In stock news, Oracle Corporation (NASDAQ:ORCL) took a beating following yesterday's disappointing earnings report, as investors looked past the company doubling its dividend and increasing its share repurchase program by $12 billion. On the conference call, the company pointed to economic weakness in Europe as well as currency headwind as obstacles. This weighed on big-cap tech stocks like Apple Inc. (NASDAQ:AAPL), IBM (NYSE:IBM), and most notably, key Oracle rival SAP AG (NYSE:SAP).
Monday's Financial Outlook
To kick off next week, we'll see the Chicago Fed National Activity Index and the Dallas Fed Manufacturing Survey numbers at 8:30 a.m. ET and 10:30 a.m. ET respectively. Dallas Fed President Richard Fisher will be giving a speech on monetary policy in London at 1:00 p.m. ET.
Elsewhere, traders will likely be paying close attention to action in overseas markets, notably China, given worries over a cash crunch there.
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