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Despite posting a subdued performance on Friday, the markets were pummeled this week as anxiety has ballooned that Europe's debt crisis is rapidly sweeping through global economies.
The Dow Jones Industrial Average rose 25.4 points, or 0.22%, to 11,796, the S&P 500 fell 0.48 point, or 0.04%, to 1,216 and the Nasdaq Composite slipped 15.5 points, or 0.6%, to 2,572.
After sustaining powerful selloffs in the past two sessions, trading was relatively calm on Friday. Still, the broad S&P 500 slid 3.8%, the Nasdaq tumbled 4% and the Dow shed 2.9% for the week. The Nasdaq and S&P are also now down for the year, while the blue chips are still in positive territory.
On a broader level, utilities, consumer-driven stocks and basic materials shares also performed well. In particular, fertilizer makers, like CF Industries (CF) posted big gains on an upbeat note for Lazard.
Technology shares were the worst-performing sector, pressuring the tech-heavy Nasdaq. Indeed, technology heavyweight Microsoft (MSFT) was one of the worst-performing Dow components.
European 'Contagion' Fears Balloon, But Traders Hope for Action
Traders paid close attention to developments throughout on Europe's deepening debt crisis throughout the week.
European officials have discussed the concept of having the European Central Bank lend to the International Monetary Fund to give it the requisite firepower to rescue large economies, like Italy, according to multiple media reports. The ECB is the sole European institution that has the power to create money, leaving it the best-poised to help some of the continent's biggest economies that would require too much funding for the types of bailouts that smaller countries like Greece have received.
However, there are many political hurdles that could prevent such a move, analysts say. The ECB has a single mandate: keep inflation at the target level. The central bank technically isn't required to buoy the economy, unlike, say, the U.S. Federal Reserve, which has a dual mandate to keep both inflation and unemployment in check. Additionally, major European countries, like Germany, have posed strong opposition to the ECB getting involved more deeply in the crisis.
Still, the central bank purchased Spanish and Italian debt in a bid to keep yields under control, according to media reports. Both of those countries are facing borrowing costs that are close to the levels Greece, Ireland and Portugal had before requiring bailouts.
The euro jumped 0.35% to $1.351 on the news as traders hoped Europe would take further steps to ease the crisis, falling from earlier highs. Meanwhile, the U.S. dollar slumped 0.42% against a basket of six world currencies.
Global policymakers, along with market participants, have been concerned that the sovereign debt crisis that began in relatively small economies with high public debt is beginning to materially affect much larger ones by pushing up borrowing costs, which creates a perilous feedback loop that increases the country's debt burden.
"Contagion has now happened," Louise Cooper, a senior analyst at London-based BGC Partners said in an interview with FOX Business, citing officials' inability to put a "firewall" around countries like Greece.
European blue chips were down 0.27%, shedding earlier losses.
Traders have also been paying close attention to energy markets, where crude oil prices have been hovering about the $100 a barrel mark for the first time in months.
The benchmark oil contract traded in New York skidded $1.41, or 1.4%, to $97.41 a barrel. Wholesale RBOB gasoline slid 3 cents, or 1.1%, to $2.47 a gallon.
Consumer gasoline prices have yet to be affected by the dramatic shift in futures markets. A gallon of regular costs $3.38 on average nationwide, down from the $3.44 drivers paid last week, but still well higher than the $2.89 last year, according to the AAA Fuel Gauge Report.
On the economic front, the Conference Board's leading economic indicators gauge, aimed at forecasting future economic activity, rose 0.9% in October from the month prior -- notching a record high and coming in three-tenths of one percentage point higher than economists anticipated. This comes as yet another positive datapoint on the U.S. economy that have helped economists overcome fears that America may be headed for a double-dip recession.
Still, with Congress deadlocked on how to get the country's debt in order, analysts remain only cautiously optimistic: "While domestic economic risks have diminished, domestic political risks remain high," a team of economists at IHS Global insight, led by Nariman Behravesh, wrote in a note to clients.
U.S. government debt yields moved higher after falling in the prior session. The benchmark 10-year note yields 2.017% from 1.965%.
European blue chips fell 0.27%, the English FTSE 100 fell 1.1% to 5,363 and the German DAX slumped 0.85% to 5,800.
In Asia, the Japanese Nikkei 225 slid 1.2% to 8,375 and the Chinese Hang Seng sold off by 1.7% to 18,491.