Stock Market News for June 7, 2010 - Market News

U.S. stocks tanked on Friday after the May employment report quashed big hopes and added to the worries of investors who were already jittery about a Hungarian official’s comment late-Thursday that Hungary faces a debt crisis similar to Greece.  Although Hungary is not a part of the eurozone, the comments suggested the sovereign debt crisis is spreading across Europe and could be worse than expected. 

Major stock indexes ended well into the red, with the Dow average plunging 324 points, or about 3.2% to end at 9931.97, its lowest close since February 8.  The widely followed S&P 500 index slid 38 points, or 3.4% and the tech-laden Nasdaq tumbled 3.6% to close down about 1.7% for the week.  On the New York Stock Exchange, declining stocks beat those that advanced in price by a nine to one margin on volume of 1.64 billion shares. 

An official from the Hungary’s ruling Fidesz party raised the specter of a developing debt crisis in the country, likening the situation to those of Greece.  The comments further weakened the euro, sending the currency below its 10-year average of $1.20.  The euro dropped 2.5% against the dollar during the week. The Waning risk appetites sent Treasury prices up and the yields down.  The yield on the benchmark 10-year dropped to 3.197%.  

The decline Friday was broad based with all 30 DJIA components closing in the red.  Shares in Caterpillar CAT and American Express AXP dropped 5.5% and 5.3%, respectively.  General Electric GE fell 4.5%.  All but two of the S&P 500 stocks fell.

Bearish sentiments sent Asian and European stocks lower today.  The euro, however, rebounded before falling to fresh four-year lows against the U.S. dollar, helped by an unexpected 2.8% gain in German factory orders, versus expectations of a 0.4% drop.  Risk-off sentiments sent the Shanghai Composite index off 1.64% and the Hang Seng index dropped 2%.  The Nikkei 225 stock average led with a drop of 3.84%.
 
Industrial metals declined as growth prospects dimmed, sending copper prices off 2.2%, close to 8-month lows, with oil prices trading off 1.5% on lessening demand assumptions.  Worries about the European debt crisis kept the euro under pressure as the currency fell to a fresh four-year low against the US dollar.  However, a surprise 2.8% gain in German factory orders, versus expectations of a 0.4% drop helped the shared currency regain some ground.      

June being historically weak for the stock markets, the current spate of volatility is likely to continue as traders adjust to changing of global recovery assumptions.  Europe’s debt problems, regulatory overhauls and political uncertainties would all play a part in markets’ moves in the coming days.  Nevertheless, bargain hunters would be eager to pick up values amid the mire of downtrodden securities.