Global Markets Overview 08/15/2011
US Markets
U.S. stocks closed higher Friday as an upbeat retail sales report trumped a weak reading on consumer confidence, capping one of the most volatile weeks in Wall Street history. The Dow Jones Industrial Average finished up 125.71 points, or 1.13%, at 11269.02. The blue-chip index suffered a 1.53% weekly loss despite registering back-to-back gains for the first time since July 7. The Dow also produced triple-digit moves in all five days for the first time since January 2010. Friday's trading capped a week of violent daily gyrations.
The Dow had surged 423 points in Thursday's session, marking the first time in the index's 115-year history that it moved by more than 400 points in four straight days of trading. The index, which snapped that streak Friday, is now on a three-week losing skid, dropping 11.1% over that time span. Boeing was the Dow's biggest gainer Friday, rising $2.90, or 4.9%, to 61.75. Hewlett-Packard rose 1.27, or 4.1%, to 32.32 and United Technologies gained 2.71, or 3.9%, to 72.45. Bank of America was the Dow's biggest loser this week, dropping 12%.
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For Friday, it fell six cents, or 0.8%, to 7.19. The Standard & Poor's 500-stock index gained 6.17 points, or 0.53%, to 1178.81, led by industrial and consumer discretionary stocks. The index notched its second straight day of gains for the first time since July 22. For the week the S&P 500 dropped 1.72%. It's down 12% throughout its three-week losing skid. The Nasdaq Composite rose 15.30 points, to 0.61%, to 2507.98.
For the week, the technology-oriented index dropped 0.96%. The daily moves this week were the wildest since the depths of the financial crisis in late 2008. Investors this time are worried about a possible double-dip recession in the U.S. and the euro zone's debt crisis spreading to bigger members of the 17-nation bloc. For Friday, the market gravitated toward a positive reading on consumer spending.
Retail sales, an important indicator of consumer spending and typically a major driver of economic growth, rose 0.5% in July. Consumers spent more on gasoline, electronics and other merchandise, potentially easing concerns that Americans are pulling back. The data overshadowed an indicator of consumer sentiment that showed a sharp fall in August. The consumer sentiment index from Reuters/University of Michigan tumbled to 54.9 in mid-August, the lowest level since 1980 and down sharply from 63.7 in late July. Economists had expected the reading to ease only to 62.
European Markets
European equity markets rallied for a second session Friday after several countries introduced short-selling bans. The Stoxx Europe 600 index surged 3% to end at 237.49, extending gains in afternoon trade after an encouraging report on U.S. retail sales, which also buoyed Wall Street. For the week, which was marked by heightened volatility, the Stoxx 600 fell 0.6%. Bank stocks remained the focus of attention after France, Spain, Italy and Belgium all introduced various short-selling bans to try to stem the sector's recent decline.
Shares of BNP Paribas rose 4.2% and Natixis added 9.2%, helping lift the French CAC 40 index 4% higher to 3,213.88. The gain came even as data showed the French economy recorded no growth in the second quarter. In other markets that imposed bans, UniCredit SpA gained 5.6% in Milan, Banco Santander rallied 6.6% in Madrid, and Dexia SA surged 17% in Brussels. The gains also came after the European Central Bank said overnight lending to banks through its marginal lending facility fell back sharply, to EUR227 million from a three-month high of over EUR4 billion the previous day.
Banks in other jurisdictions were also sharply higher, including a 5.3% jump for Barclays PLC in London, which boosted the FTSE 100 index by 3% to 5,320.03. Barclays shares lost a third of their value from the start of July up to Thursday's close. Societe Generale analyst James Invine said in a note to clients Friday that the valuations of Barclays, Lloyds Banking Group PLC and Royal Bank of Scotland Group are far too low at just half their tangible book value as stocks have tumbled in recent weeks. Switzerland's UBS AG was another top performer, rising 5.7% as the dollar and euro continued to rebound against the Swiss franc. In Germany, the DAX 30 index rose 3.5% to 5,997.74, as insurer Allianz SE rallied 5.3% and utility RWE AG surged 6.5%.
Asian Markets
Asian stock markets ended mostly higher Friday but pared early gains as investors remained cautious amid the week's turmoil in markets, while losses for auto makers and computer-chip producers sent Tokyo and Seoul into the loss column. Japan's Nikkei Stock Average finished down 0.2% at 8963.72, despite trading 1% higher in the early minutes of the session, while South Korea's Kospi dropped 1.3% to 1793.31.
The Bombay Stock Exchange's Sensitive Index fell 1.3% to 16839.63. Among the region's winners, Hong Kong's Hang Seng Index ended with a 0.1% gain at 19620.01, well off its highs of the day, while the Shanghai Composite Index advanced 0.5% to 2593.17.
Semiconductor firms lost ground amid speculation that weak dynamic random-access memory prices will dent profits, with Korea's Hynix Semiconductor tumbling 9.6%, and Japan's Elpida Memory down 5.8%. Auto makers were also weak, with Honda Motor Co. down 1.3%, and Toyota Motor Co. 1.1% lower in Japan, while Hyundai Motor Co. lost 4.6% and Kia Motors Corp. fell 5.3% in South Korea. Jefferies strategist Naomi Fink said that investors were likely exiting exporters, such as auto makers, as they worry global growth is slowing. Following a wild ride for global stocks this week, Fink said that investors are still very uncertain.
Commodities
Base metal prices closed mostly lower Friday after a volatile week of trading, with industry participants still struggling to get a clear sense of where the markets are heading in the short term. LME three-month copper closed down 0.2% at $8,865/ton, while three-month aluminum finished down just $2 at $2,380/ton. Thinly-traded three-month tin finished 4.4% higher at $24,650/ton, rebounding after recent sharp losses.
Crude oil futures prices ended a wild week modestly lower Friday as traders continue to take the pulse of the struggling U.S. economy. Crude oil shed 1.7% from the previous Friday's settlement, a modest loss that belies a violent 14.3% high-low swing in intraday prices.
Light, sweet crude oil for September delivery on the New York Mercantile Exchange settled down 34 cents Friday at $85.38 a barrel, $1.50 lower than a week ago. ICE Brent crude oil for September delivery settled 1 cent higher on the day, at $108.03 a barrel, and was down $1.34, or 1.2% on the week.
Gold logged its second straight day of losses as some investors cashed in recent gains while others grew more confident and ventured away from the safe haven to riskier assets such as equities.
The most actively traded contract, for December delivery, eased $8.90, or 0.5%, to settle at $1,742.60 a troy ounce on the Comex division of the New York Mercantile Exchange. Gold for August delivery, the thinly traded front-month contract, ended $8.90, or 0.5%, lower at $1,739.90 a troy ounce.