Stock Market News for June 22, 2010 - Market News

Beijing’s weekend promise of a more flexible renminbi invigorated markets across the globe but absence of clear-cut details in China’s pledge had Wall Street wiping off strong early-morning gains in a late-day slide.  The Dow average closed down 8 points, after having risen as much as 143 points in the first-hour of trading, as investors treaded cautiously.

For once, China’s surprise pledge to let yuan move more freely silenced critics who claim Beijing has chosen to keep the currency artificially low to gain an unfair trading advantage.  Material companies were quick to take the lead on expectations the Chinese move would boost demand.  However, retailers took a haircut, weighed down by concerns Chinese imports would become expensive.  Nevertheless, the decision reflected China’s confidence in the global economic recovery and an attempt to minimize trade tensions with the United States.

The widely tracked S&P 500 index fell 4.31 points, or 0.4%, to 1,113.20 and the tech-heavy Nasdaq dropped almost 21 points, or 0.9%, to 2,289.09.  Trading volume was thin.  On the New York Stock Exchange, three stocks advanced for every two that fell on volume of 1.069 billion shares.  

Today’s trading could lack activity as the Federal Open Market Committee kicks off its two-day policy meeting.  Expectations are intact that key interest rates would be kept near historically low levels.  However, given soft employment levels and a weak housing front, it would be of interest to see the Fed’s take on the economy when it comes out with a statement tomorrow.

Stock futures suggest Wall Street would open with modest losses, as European debt concerns once again take center stage.  BNP Paribas’ rating cut by Fitch and the euro resuming its slide are weighing on sentiments this morning and have sent stock futures off at least 0.1%

Shares in Alcoa AA, jumped 5.5%, and led the gainers on the DJIA on expectations China’s actions would boost demand for raw materials.  American Express AXP shares added 1.4%; General Electric GE was up 0.9%; Caterpillar CAT, a major exporter of goods to China, closed up with gains of 0.3%.  US Steel X jumped 3.6% to $44.97 and AK Steel AKS added 2.6% to $14.26. 

Crude prices touched a six-week high of $79 before giving up some ground to settle at $77.82, up 64 cents.  Among the ten S&P 500 industry sectors, basic material shares rose 0.5% and industrials gained 0.1% as a group on improved expectations of a global economic recovery.  Gold prices touched a record high of $1,266.50 an ounce before retreating $17.60 to settle at $1,240.70 an ounce. Copper prices advanced.  Among the ten industry groups, utilities closed off 0.7%; oil and gas 0.4%; health care 0.4%; consumer goods 0.3%; telecommunications 0.2%, and financials 0.2%.  

Consumer-services and technology fell 1% on the day on concerns Chinese imports would become expensive. Retailers weakened, JC Penney JCP fell 3%; and Nordstrom JWN dropped 2.4%. Macy's M dropped 3.4%, to $20.74, while Abercrombie & Fitch ANF fell 2.3%, to $34.51. Shares in Amazon AMZN dropped $3.28 to $122.55 after it slashed its price of its Kindle e-book reader.