Markets Take a Nosedive, Bond Yields Spike
Today's financial recap and tomorrow's financial outlook.
The S&P 500 fell 1.2% today as investors became anxious over shaky world markets and mixed economic data.
Risky stocks were particularly out of favor, with the Nasdaq down 1.6% and the Russell 2000 down 1.4%.
Nasdaq heavyweight Apple (AAPL) led the way down with a 2.3% drop.
Biotechs got hit hard. with the Nasdaq Biotechnology ETF (IBB) down 2.1%. Meanwhile, the SPDR S&P Biotech ETF (XBI) fell 2.8%.
Cybersecurity was also in rough shape. Qualys (QLYS) reported mixed earnings and lowered its full-year guidance, triggering a 32.8% sell-off. The Purefunds ISE Cybersecurity ETF (HACK) fell 4.1% today.
US imports surged, pushing the trade deficit to its largest point since 2008.
The 10-year US Treasury yield rose 2.2 bps to 2.167%, which drove outperformance in financials, and underperformance in rate-sensitive groups like utilities and real estate.
Oil prices rose after Reuters reported that OPEC plans on keeping output at current levels at the June 5 meeting. The increase in prices sent transports and airlines down today.
Tesla (TSLA ) gave back its gains from earlier this morning. Shares were up 3% after receiving a Buy rating from Jefferies with a $350 price target. Jefferies' analyst stated that the company will have a key competitive advantage with its Powerwall home battery.
Netflix (NFLX) was up 1.9% today after receiving an upgrade from Bank of America (BAC), which took it to a Buy rating with a $722 target price.
The European Commission raised its 2015 GDP forecast to 1.5% from 1.3%. However, it cut its outlook for Greece and France.
European bond yields jumped, putting a big scare into traders. The 10-year German bund yield, which has been skyrocketing over the past few weeks, rose 6.2 bps to 0.516%. The Italian 10-year rose 27.4 bps to 1.807%, and the Spanish 10-year saw a similar jump..
European equity markets closed lower today, with the DAX falling 2.51%, France's CAC falling 2.12%, and Spain's IBEX falling 2.76%.
Greece fears continue as IMF payments are due tomorrow and May 12. The news flow remains very active and in some cases, contradictory.
In Asia, The Reserve Bank of Australia cut its main rate to 2%.
Chinese markets were down big today on speculation that the government will step in to cool down speculative activity in the country's red-hot equity markets. There were also news reports that several Chinese brokerage houses tightened margin rules.
Wednesday's Financial Outlook
Tomorrow will be a big day for economic data. Traders will be very interested in the ADP Employment Change at 8:30 a.m., which could give clues on employment trends ahead of Friday's big NFP report. Additionally, energy traders will be closely watching the crude oil inventory report at 10:30 a.m. following today's pop in crude above $60.
We'll also see MBA Mortage Applications, Nonfarm Productivity, Unit Labor Costs, MBA Mortgage Foreclosures, and Mortgage Delinquencies data.
In earnings, Anheuser-Busch (BUD), Brookfield Asset Management (BAM), Chesapeake Energy (CHK)
Enbridge (ENB), 21st Century Fox (FOXA), MetLife (MET), Prudential (PRU), Sunoco Logistics (SUN), Tesla Motors (TSLA), and Transocean (RIG) are names of interest delivering numbers.
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