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The Ugliest Day of the Year


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


Markets sold off around the globe after yesterday's Fed meeting and the Chinese credit crunch. The Chinese yield curve is now severely inverted, meaning longer-term maturities are yielding less than shorter ones, which signifies a sharp liquidity crisis in Chinese financial companies. The Hang Seng (INDEXHANGSENG:HSI) plunged 2.88%.

US initial jobless claims came in slightly worse than expected at 354,000 against the 340,000 consensus. The Philadelphia regional manufacturing survey showed greater than expected growth, reporting a reading of 12.5 against the -1.0 consensus. Existing home sales also topped estimates, coming in at 5.18 million vs. the 5 million that was expected. Despite the upbeat data, markets opened low and continued lower throughout the day. The S&P 500 (INDEXSP:.INX) plunged a whopping 2.5% on the day.

Precious metals as well as the SPDR S&P Homebuilders ETF (NYSEARCA:XHB) lead the market nosedive on decreasing inflation expectations, with the homebuilders index tumbling more than 5%. Gold fell 7% to $1,276 per ounce. The bond market is in free-fall as yields continue to soar. The 10-year rose another 12 bps to 2.43%.

Facebook Inc (NASDAQ:FB) announced the launch of a video version of Instagram. Shares traded down 1.9% on the day.

Tomorrow's Financial Outlook

Tomorrow is Quadruple Witching options expiration, during which all options of the indexes, futures and stocks expire on the same day. The event occurs at the end of each quarter on the third Friday of the month. This normally is accompanied by larger than average volume out of the gate.

Canadian CPI and retail sales will be released tomorrow morning at 8:30 a.m. EDT.

Darden Restaurants, Inc. (NYSE:DRI) is reporting earnings tomorrow. The restaurant group is expected to report earnings per share of $1.03 for the second quarter.

Twitter: @Minyanville

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No positions in stocks mentioned.

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