Emerging markets continued their brisk sell-off overnight
leading to further declines in other developed markets. Indian,
Thailand, and Indonesian stock market indices were all down more
than 3%. Additionally, the Indian rupee made a new low against the
US dollar at 66.19. Other emerging market currencies like the
Turkish Lira and Mexican Peso reached new record lows against the
European markets opened in the red and continued to fall throughout
the day. The Spanish and French indices were the worst performers,
down more than 2.4%. The UK
(INDEXFTSE:UKX) only fell 0.79% on the day alongside strong gains
in the country's government bonds.
US markets were under pressure in the pre-market following worries
over military action in Syria. Yesterday afternoon, Secretary of
State John Kerry kicked off the potential for military action
against Syria in a speech. Today, media reports indicated that the
Obama administration was planning an imminent military strike
against Syria that did not include a no-fly zone or ground troops.
(INDEXSP:.INX) finished down 1.59% and the
Russell 2000 (
INDEXRUSSELL:RUT) was down 2.41%, both at the lows of the day.
Total exchange volume clocked in at 9.6 billion shares, below the
50-day average, and not indicative of capitulation. Financials were
the worst sector, falling 2.33%. Tech, industrials, and materials
sectors also finished in negative territory.
Crude oil rallied strongly, up 2.8%, touching the prior high for
the year at $109.32 before settling to close slightly lower.
Treasuries got off to a slow start, but rallied very strongly
following a $34 billion auction of 2-year notes. Direct bidders
represented 26.1% of the auction, the most since April. This was
viewed as a positive for the market as the 10-year rallied by as
much as 4 basis points. Gold rallied 1.5% today, the other
component of the fear trade with crude oil.
) reported earnings before the market opened. Earnings-per-share
beat at $0.83 vs. $0.74 estimates, but revenues missed at $926
million vs, $942.4 million estimates. The company guided higher on
full-year EPS, up to $3.50-$3.60 vs $3.53 estimates. On the
earnings call, however, the company said it expected to see a
modest decline in US sales for the rest of the year and that
higher-end jewelry sales outpaced lower-end sales.
Tomorrow's Financial Outlook
Weekly mortgage applications, via the Mortgage Bankers Association,
will be released in the morning. Last week, total applications fell
4.6% and are down 44.4% from the prior year. July pending home
sales will be released at 10:00 a.m. ET. Economists expect sales to
remain unchanged from the prior month and up 7.9% from the prior
In global market-moving news, the GfK institute will release its
consumer confidence survey for August. Today, the IFO's business
climate index rose to 107.5 for August from 106.2 in the prior
month. Other economic data includes China's leading economic
indices for July and UBS' Swiss consumption index.
Major US earnings reports tomorrow include