Stocks are falling again as interest-rate fears sweep markets.
S&P 500 futures are down about two-thirds of a percent,
following a drop of 1.4 percent yesterday. European markets have
lost more than 2 percent and are trying to hold their lows.
Shanghai and Hong Kong led the decline in Asia during the overnight
session after China's manufacturing sector continued to show signs
The big catalyst was Federal Reserve Chairman Ben Bernanke's press
conference yesterday afternoon, during which he said the central
bank could halt bond purchases by next year. The comments were
considered more hawkish than most economists had expected.
Stocks fell on the news and closed near session lows. The U.S.
dollar rallied against most other currencies, which is causing huge
losses for precious metals this morning.
The S&P 500 has been trying to rebound for the last two weeks
after testing support at its 50-day moving average on June 6.
Attention now focuses on whether buyers will step in to defend
current levels, or a broader wave of selling takes hold.
Bulls may find a silver lining in the fact that Bernanke cited
signs of an improving U.S. economy. The former Princeton University
professor, expected to leave the Fed in January, said employment is
recovering more quickly than previously forecast, and he promised
that actual interest-rate hikes remain "far in the future." Reduced
asset purchases simply means that fewer Treasury bonds will be
bought, permitting longer-term rates to increase.
Dollar strength is the main theme in foreign-exchange and commodity
markets, with every major currency and futures contract lower. Oil
declined 1.5 percent, copper fell almost 2 percent, silver plunged
7 percent, and gold lost 5 percent.
In company-specific news, telecom-equipment company Finisar is
indicated to open higher by 10 percent after earnings and revenue
beat expectations. Insurance-software provider Ebix is down 38
percent after an affiliate of Goldman Sachs backed out of a buyout
agreement. Software maker Red Hat is modestly higher on strong
Facebook is also likely to be active as the company holds a press
conference to announce a new product.
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