Euro Weakness, Greece Fears Spook Wall Street
FOX Business: The Power to Prosper
The markets closed a choppy trading week in the red after a strengthening dollar, concerns about Greece's sovereign debt crisis and intense volatility in commodities shook traders' confidence.
Today's Markets
The Dow Jones Industrial Average was down 100 points, or 0.79%, to 12,596, the S&P 500 lost 10.9 points, or 0.81%, to 1,338 and the Nasdaq Composite was down 34.6 points, or 1.2%, to 2,828. The FOX 50 was down 7.9 points to 938.
Trading has been tumultuous much of this week, with wild swings in the commodity market paired with a slew of economic data and corporate news driving the markets. Indeed, the VIX, which is a gauge of volatility, soared 8% in mid-day trading.
Despite the rollercoaster ride, stocks only lost a little bit of ground on the week. The Dow fell 0.3%, the S&P 500 was off 0.2% and the Nasdaq inched lower by 0.03%.
Weakness in the euro came amid rising concerns over the potential reverberations of ongoing issues in Greece. A potential restructuring of Greece's debt could send shockwaves throughout the 17-nation euro zone and even beyond.
The euro lost 1% against the U.S. dollar and the greenback gained 0.8% against a basket of world currencies.
Light, sweet crude lost 68 cents, or 0.69%, to $99.65. Wholesale RBOB gasoline was higher by 1 cent, or 0.34%, to $3.07 a gallon. Gasoline prices on the consumer level remain within 13 cents of all time highs despite the selloff in the futures market. A gallon of regular gas costs $3.98 a gallon on average, up from $3.81 last month and $2.89 last year, according to the AAA Fuel Gauge Report.
In metals, gold was down $13.20, or 0.88%, at $1,494 a troy ounce. Silver climbed 22 cents, or 0.63%, to $35.01 a troy ounce. The embattled metal is down 27% for the last two weeks.
Consumer prices were up 0.4% in April, and climbed 0.2% excluding volatile food and energy prices, according to the Labor Department. Both the headline and core reading were in line with analysts expectations. Gains in the headline number were led by a a 3.3% increase in gasoline prices and a 2.2% increase in energy prices.
While the data pointed to gradual increases in the core level, Peter Newland, an economist at Barclays Capital, notes prices are "on a firm uptrend."
The markets have been keeping a close eye on inflation data as energy prices remain at high levels, notwithstanding the recent selloff in the futures market. In addition, many market-watchers are concerned that the Federal Reserve's highly-expansionary monetary policy, including low short-term interest rates and its controversial long-term treasury buying program, might lead to high levels inflation.
The important factor, according to Josh Feinman, global chief economist at DB Advisors, is whether consumers begin to expect inflation to be higher over the next several years. That would set off a "self-fulfilling" chain of events whereby the specter of inflation actually begins increasing the real level of inflation, he said. Recent data have shown expectations for future inflation remain largely in check.
Also on the economic front, the preliminary reading of the Reuters/University of Michigan consumer sentiment survey increased to 72.4 in May from 69.8 in late April. Wall Street forecast the index to rise to 70. Interestingly, consumers' five-year inflation outlook ticked slightly higher to 3% to 2.9% and one-year expectations moderated to 4.4% from 4.6% from late April.
Consumer-led issues like Coach (NYSE:COH) and Best Buy (NYSE:BBY) could be the most swayed by this report.
Corporate News
Yahoo! (NASADQ:YHOO) shares were under pressure after the company revealed Alibaba Group, a company Yahoo has a 43% stake in, transferred its online payment subsidiary, Alipay, to a separate entity without Yahoo's, shareholders' or the board's permission.
Eastman Kodak (NYSE:EK) didn't infringe on Apple's (NASDAQ:AAPL) patents for digital cameras, a judge at the International Trade Commission ruled, giving Kodak shares a boost.
Nvidia (NASDAQ:NVDA) posted better-than-expected first-quarter results and second-quarter outlook, but concerns about its graphics processor business dragged the stock down.
Agilent Technologies (NYSE:A) revealed a stronger-than-expected 85% surge in fiscal second-quarter profits, leading the electronics testing equipment maker to raise its full-year guidance.
Foreign Markets
The English FTSE 100 was down 0.32% to 5,926, the French CAC 40 fell 0.11% to 4,019 and the German DAX edged lower by 0.55% to 7,403.
In Asia, the Japanese Nikkei 225 fell 0.7% to 9,649 and the Chinese Hang Seng climbed 0.88% to 23,276.