ZLBT Chats

Saturday, January 29, 2011

WALL STREET >>> Bleak Earnings, Egyptian Unrest Spark 166-Point Dow Drop

Dow Sank On The Nile Weighted By Economic Data

Fears over unrest in Egypt sent U.S. stocks reeling Friday to their biggest one-day decline in months and put an end to the market’s eight-week win streak, as investors sought safety while oil prices surged.
Stocks were hammered lower today, with the major market indexes swallowing steep losses in the face of lackluster corporate earnings, discouraging economic data, and troubling political developments in the Middle East. Setting the bearish tone early, heavy hitters such as Ford Motor (F), Microsoft (MSFT), and Amazon.com (AMZN) all took a post-earnings drubbing, as traders found fault with each firm's quarterly report. Meanwhile, the latestThomson Reuters/University of Michigan consumer sentiment index pointed to rising skepticism in January, while the Commerce Department estimated that fourth-quarter gross domestic product (GDP) rose by a weaker-than-forecast 3.2%.

As if these downbeat data points weren't enough to spook the bulls, increasingly unpopular Egyptian President Hosni Mubarak today deployed his military and declared a country-wide curfew in an attempt to curtail four straight days of protests and riots. Despite the objections of the U.S., the Egyptian government has now taken steps to shut down mobile service, Internet access, and subways as it attempts to cripple activists' ability to organize. As political tension in the Middle East rose from a simmer to a boil, oil and gold futures emerged as the day's big winners -- while the major market indexes beat a hasty retreat into the red.

The Dow Jones Industrial Average (DJIA – 11,823.70) ended the day on a hefty deficit of 166.1 points, or 1.4%, as only two of its 30 components closed higher. Microsoft and Home Depot (HD) set the tone for the 28 declining blue chips, while both DuPont (DD) and Procter & Gamble (PG) managed to end fractionally higher. Today's steep sell-off left the Dow beneath its 10-day moving average for the first time since Jan. 10, but the blue chip barometer remains north of its 20-day trendline.

For the week, the Dow dipped 0.4%, unceremoniously ending its eight-week winning streak.

The S&P 500 Index (SPX – 1,276.34) settled for a loss of 23.2 points, or 1.8%, and suffered a daily close beneath its 10-day and 20-day moving averages for the first time since Nov. 30. Finally, the Nasdaq Composite (COMP – 2,686.89) gave up 68.4 points, or 2.5%, after finding an intraday floor near 2,680. The SPX shed 0.5% this week, while the COMP lost 0.1%.

Oil Rises 4.3% On Egyptian Tensions
Crude price were catapulted higher today by the churning conflict in Egypt, despite the fact that the country ranks just 21st among oil-producing nations. Analysts are concerned that the political unrest may spread to neighboring oil-rich countries, such as Algeria, potentially hampering global supplies. Further raising the stakes on the perceived supply threat, there's also some uncertainty about the impact on two major energy transportation arteries running through Egypt -- the Suez Canal and Sumed pipeline. By the close, crude oil for March delivery added $3.70, or 4.3%, to finish at $89.34 per barrel. This marked the contract's largest daily jump since last May, bringing its weekly gain to 0.3%.


1 comment:

  1. This comment has been removed by a blog administrator.