Stocks plunge as Europe drops

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Stocks are falling again today amid heavy selling in Europe.

S&P 500 futures are down almost 0.75 percent, while markets across the Atlantic are down 1 percent to 2 percent. Asia was mostly negative in the overnight session, with Japan and China down less than 1 percent but Korea and Thailand rebounding.

Today's declines began after a low inflation reading in Europe caused speculation that the region's central bank will ease monetary policy at its meeting next Thursday. That's hurting sentiment toward all currencies associated with risk, especially those from emerging-market countries that have struggled in recent weeks.

The Australian dollar, Brazilian real, Turkish lira, Russian rubble, and South African rand are all lower, while safe-havens such as the U.S. dollar, Swiss Franc, and Japanese yen are up across the board.

The S&P 500 now faces a key test as it attempts to hold its recent low of 1770. The index has been consolidating around these levels since falling sharply a week ago but is still above the key 100-day moving average that's provided support for the last year's uptrend. A break of current levels could trigger further selling.

Investors are also bracing for major economic news next week. In addition to the European Central Bank's meeting on Thursday, key manufacturing data comes out Monday, followed by important employment numbers on Wednesday and Friday. Corporate earnings continue at a brisk pace as well.

Amazon.com is indicated lower by 7 percent this morning after quarterly results missed expectations. Google is up 3.5 percent after revenue beat expectations amid continued online advertising growth. JDS Uniphase rose 6 percent after beating expectations and issuing strong guidance. Zynga is rallying 17 percent and Tyson Foods is climbing 7 percent on their numbers. Weak Barbie doll sales have Mattel down 10 percent. Wal-Mart Stores fell 2 percent after warning that fourth-quarter results will miss guidance.

Other companies reporting today include MasterCard, Chevron, Tyco, LyondellBasell Industries, Newell Rubbermaid, and Legg Mason. The Chicago purchasing managers index will be released at 9:45 a.m. ET, and Chinese manufacturing data comes out late this evening.

Commodities are also reflecting caution as oil drops 1 percent and natural gas declines 2.5 percent. Gold and silver are up half a percent and a full percentage point respectively, while copper is down half a percent--all consistent with risk aversion. Agricultural products are modestly higher.




The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.


This article appears in: Investing , Options

Referenced Stocks: SPX

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