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The reason the Dow is falling today...Stocks Fall Sharply as Jobless Claims Jump

 
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05/20/2010 10:31 AM
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The reason the Dow is falling today...Stocks Fall Sharply as Jobless Claims Jump
[link to www.cnbc.com]

Stocks fell sharply at the open Thursday after an unexpected spike in jobless claims and as global jitters pushed the dollar higher.

The Dow Jones Industrial Average was down more than 200 points, or 2 percent, at the open, and the CBOE volatility index spiked above 40.

All 30 Dow components were lower, led by Caterpillar [CAT 58.49 -2.95 (-4.8%) ], Alcoa [AA 11.1516 -0.6284 (-5.33%) ] and Boeing [BA Loading... () ].

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The Dow and S&P 500 are nearing correction territory and are on track to have their worst month since February 2008.

The market was already pointing lower today as volatility surged in global markets amid worries about financial reform and the sovereign debt crisis, when the jobless claims report came out and further rattled the market.

Initial claims for unemployment benefits shot up by 25,000 to 471,000 last week. Economists had expected claims to drop to 440,000.

Meanwhile, the Philadelphia Fed reported its gauge of regional manufacturing activity dropped to 21.4 in April, slightly more than expected, from 20.2 in March. And leading indicators fell for the first time in a year in April.

The dollar surged against the euro. Commodity prices fell, with crude oil dropping below $68 a barrel and gold falling to near $1,180 an ounce.

Treasurys, particularly longer-dated securities, jumped on the stock market turmoil. The 30-year bond gained more than one point in price, sending its yield to 4.16 percent, its lowest since Oct. 20, 2009. Prices and yields move in opposite directions.

Uncertainty grew on the back of concerns about the euro zone's economic health, and whether Germany’s financial reforms will backfire on stocks.

Other European nations, including France, the Netherlands and Finland, announced they have no plans to follow Germany’s ban on naked short selling of specific instruments, to control what Chancellor Angela Merkel called "destructive" markets.

Also in Europe, more protests are scheduled to take place in Greece today against the new austerity measures.

Asian markets were lower, with Tokyo, Seoul and Sydney down more than 1.5 percent each, as political divisions in Europe, again, and fears of more market regulation pressured stocks.

In earnings, office retailer Staples [SPLS Loading... () ] reported a 32 percent rise in profit to 26 cents a share.

RELATED LINKS

Current DateTime: 06:35:36 20 May 2010
LinksList Documentid: 37248948

* European Shares Tank on Shorting-Ban Fears
* Asian Stocks Fall as Euro Worries Linger
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* Oil Falls to Below $71 on Europe Concerns
* Euro's Drop Continues on Regulation Concerns

After the closing bell, earnings are due from Dell [DELL 14.40 -0.58 (-3.87%) ], Gap [GAP 5.71 -0.22 (-3.71%) ], and Intuit [INTU 34.49 -1.08 (-3.04%) ].

In deals, Symantec [SYMC 15.15 -0.48 (-3.07%) ] is paying $1.28 billion for VeriSign's[VRSN 27.31 -0.68 (-2.43%) ] security business, which specializes in Web site identity and authentication.

And on the political scene, the financial regulatory reform bill failed to pass in the Senate on Wednesday amid resistance from both parties, but Democrats will attempt to seal the deal on Thursday with a fresh vote at 2:30 pm Washington time. SEC Chairman Mary Schapiro and CFTC Chairman Gary Gensler will testify about new regulations to prevent May 6th’s "flash crash” from happening again.
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