Stock Market News for May 25, 2010 - Market News

U.S. stocks erased all the previous session’s gains, dragged down by a late-session slide in the financial sector as concerns about tighter regulations on Wall Street and European debt troubles showed no signs of easing.

The declines, precipitated by losses in the financial sector, spread to other sectors and sent the Dow average off 80 points in the final minutes of trading.  The blue-chip average closed down 127 points, erasing Monday’s 125-point gain.  Twenty-nine of thirty DJIA components closed the day in the red, led by losses of more than 3.5% in financial components Bank of America BAC and JP Morgan JPM. 

However, strength in some tech stocks was notable.  Google GOOG rose 1.1% after Citigroup C added the company to its top picks list.  Apple AAPL shares rose 1.8% after Morgan Stanley MS raised its price target on the iPhone maker by $35 to $310.

This morning’s reports say North Korean Premier Kim Jong-Il has put his troops on military standby, heightening geopolitical tensions in the region and sending risk appetites sharply lower.  Asian shares fell to their 10-month low today.  A stronger yen sent the Nikkei 225 stock average off 3.1%, while the brewing tension between the two Koreas sent the Hang Seng off 2.4%, and reversed Monday's gains in the Shanghai Composite, with a 2.4% drop today.

This morning’s futures suggest another down day on the Wall Street.  Rising tensions in the Korean peninsula and fears of a global economic slowdown sent DJIA futures down more than 2%.  Before the opening bell, Dow futures are down 190, or 1.9%, to 9,853, the standard & Poor's 500 index futures are down 24 points, or 2.2%, to 1,047.00, while Nasdaq 100 index futures are off 34.25 points, or 1.9%, to 1,778.25.  

On Monday, the broader S&P 500 index lost 1.3% to close at 1,073.65 and the tech-heavy Nasdaq fell 0.7% to finish at 2,213.55.  Volume fell to 1.31 billion shares on the New York Stock Exchange where declining issues beat those that advanced in price by a three-to-two margin.

The news of Spain’s central bank rescuing small lender CajaSur came as a fresh blow to those looking for some stability in the financial sector.  Even as the reports caused fears of the banking systems stress, the three-month US dollar London interbank offered rate, spiked to its highest since July.  Today four savings banks proposed their merger to the Spanish central bank, which would create the country's fifth largest banking group. 

Some optimism on China's tightening intentions sent commodity prices higher, as the DJ-UBS broad-based commodity index rose 0.6% to 124.104; crude prices rose 17 cents to $70.21; and gold prices increased $17.90 for a $1,194.70 close.

All ten S&P500 industry sectors closed with losses: financials (-2.6%), oil and gas (-2.4%), basic materials (-1.6%), industrials (-1.4%), telecommunications (-1.0%), utilities (-0.9%), consumer goods (-0.8%), consumer services (-0.7%), technology (-0.6%), and health care (-0.1%).    

US Treasuries, as well as the greenback, benefited from their safe-haven appeals, and the 10-year rose 11/32 in price and its yield fell to 3.198% Monday. The Treasury plans to auction $42 billion fresh 2-year notes today.  Yesterday, the euro dropped to $1.2361 against the U.S. dollar amid contagion fears.  The dollar and the yen, meanwhile, moved higher on their safety appeal.  The yen is currently trading 1.3% higher on carry trade unwinds and the dollar 0.9% versus the euro on increased demand for "safe haven" currencies.

Copper, often seen as a proxy for growth, especially after China’s economic growth, is trading lower amid global growth concerns.  Crude prices have also weakened on growth concerns and are trading off 3% at $68.10 currently.