Overseas Election Results Stunt Stocks

Equity markets closed sharply lower on Friday and on the week after the April payrolls report showed the U.S. economy created just 115,000 new jobs, the fewest in six months.  The S&P 500 lost 2.4% last week, its largest weekly retreat since mid-December.  The Dow Jones Industrials shed 190 points, or 1.4%, while the technology-focused NASDAQ Composite fell 3.7%. Technology, Materials and Energy shares within the S&P 500 experienced the worst sector declines last week, down 3.7%, 3.5% and 3.3% respectively.   In lockstep with slowing economic conditions, crude oil slumped 6.1% on the week, ending below the $100 level for the first time since February 13th.  Treasury prices rallied on safer haven buying, with the yield on the 10-year Treasury note at its lowest level since early February.  NYSE decliners trounced advancers by over 4 to 1.   Summary of Friday’s market action:

 

05/04/12 Close

Change

% Change

% YTD

Dow Jones Industrial Average

13,038.27

-168.32

-1.27%

+6.72%

S&P 500

1,369.10

-22.47

-1.61%

+8.87%

NASDAQ Composite

2,956.34

-67.96

-2.25%

+13.48%

Russell 2000

791.84

-14.75

-1.83%

+6.87%

MSCI EAFE

1,483.87

-19.80

-1.32%

+5.05%

CBOE Market Volatility

19.16

+1.60

+9.11%

-18.12%

U.S. Treasury 10-Year (YTM)

1.879%

-5 bps

n/a

n/a

WTI Crude Oil (bbl.)

$98.49

-$4.05

-3.95%

-0.03%

Gold (oz.)

$1,642.22

+$6.24

+0.38%

+5.02%

Today’s Market Action U.S. stocks opened to a fourth day of selling as an absence of any major domestic economic data allowed investors to focus on France’s weekend presidential re-election defeat of Nicolas Sarkozy by Socialist Party Francois Hollande.  Hollande ran on an anti-austerity plan and called for more growth oriented stimulus, which is viewed as clashing with the German-led majority that agreed to stricter central bank control and increased spending discipline.  U.S. and European markets pared losses after German factory orders rose beyond forecast in March.   Risk-off Treasury buying continues with the yield on the benchmark 10-year Treasury note dipping to 1.863%. Gold is down $8.12 to $1,634.10/oz., while Nymex crude oil declines $1.89 to $96.59/bbl.        

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