The rally that propelled stocks to their best levels since days preceding Lehman's collapse lost momentum on Monday as a stronger dollar and worries related to European sovereign debt gave investors reason to retreat. The Dow average fell for the first time in seven days. Investors turned to safer bets to park their funds as equities lost favor.
The Dow average, after scaling its pre-Lehman level last week, fell 37.24 points, or 0.3%, to 11406.84. The widely followed Standard & Poor's 500-stock index fell less than 3 points, or about 0.2%, to 1223.25, ending lower for the first time in six days. The tech-heavy Nasdaq Composite index, however, closed with a slight gain at 2580.05.
On Thursday leaders of Group of 20 developed and emerging economies meet in Seoul to discuss ways to control disparities in trade balances. The vexing currency issue would also be on the agenda even as the United States and China bicker over the value of the yuan. The U.S. accuses China of keeping the value of the yuan artificially low in order to gain unfavorable trade advantages.
In an unrelated development, Beijing said this morning that it is working on measures to control the inflow of “hot money” to avoid asset bubbles. The country, along with several others, has criticized the recent quantitative easing measures initiated by the U.S. Federal Reserve, saying such measures would result in huge amount of money flowing into emerging economies.
On Monday gold prices touched a record high of $1400 an ounce, settling at $1403.20. However, Treasury prices fell slighting, sending the yield on the benchmark 10-year note up to 2.55% from 2.53%. Crude prices also posted gains, up $0.21 to $87.06.
AOL AOL was in focus yesterday, after a report in the Wall Street Journal said the company was exploring options and had hired financial advisers for the purpose. Shares in the company jumped 4.7% to $26.10.
US futures are suggesting a modest opening gain as European bourses trade higher amid again rising industrial metals prices, with gold sporting fresh record highs.
Meanwhile, this week's series of US Treasury auctions started off on a positive note Monday, as $32 billion of 3-years fetched a yield of 0.575%, 3 basis points above market prices at the time. The Treasury is scheduled to auction $24 billion in 10-year notes today with $16 billion in 30-years slated on Wednesday. Bond markets are closed on Thursday.
Today's calendar has earnings reports from Dean Foods DF, Marsh & McLennan MMC and Rockwell Automation ROK.
DEAN FOODS CO (DF): Free Stock Analysis Report
MARSH &MCLENNAN (MMC): Free Stock Analysis Report
ROCKWELL AUTOMT (ROK): Free Stock Analysis Report
Zacks Investment Research
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