Bulls got gored today.First the scoreboard:
Dow: 13,074.7, -124.8, -0.9%
S&P 500: 1,398.9, -14.4, -1.0%
NASDAQ: 3,068.0, -45.4, -1.4%
And now the top stories:
- The big bad news of the day came from Spain where a horrible bond auction sent the Spanish 10-year yield north of 5.7 per cent.
- Markets didn’t get any help from the European Central Bank this morning either. As expected, the ECB kept its benchmark rate unchanged at 1.00 per cent. However, ECB President Mario Draghi warned “upside risks” to inflation remain, which got interpreted by many as “Sorry, but you won’t be getting any more liquidity from the ECB.”
- This follows yesterday’s Federal Open Market Committee (FOMC) minutes where Fed members also communicated hawkishness that sent stock market investors running to the exits. Morgan Stanley’s Vincent Reinhart slashed his expectations for more quantitative easing. However, Reinhart also added that additional signs of economic deterioration could very well bring QE3 back to the table. PIMCO’s Bill Gross added that the Fed has effectively trapped itself in a “conundrum of providing cheap liquidity.” In other words, if pulling the punchbowl means stocks sell off, then Gross thinks the central banks will be forced to ease again.
- So, what does all this mean for stocks? Obviously, stocks sold off yesterday and today on all of this hawkishness from the centrals banks. Experts like Doug Kass and Dan Alpert think the absence of the Fed punchbowl means more bad news for stocks. This new paradigm is pitting the liquidistas against the fundamentalistas. Forget Bull Vs. Bear: This Is The Debate That Means Everything To The Market >
- Today’s announcement of the March ISM non-manufacturing industry index didn’t help the markets. The metric fell to 56.0 from 57.3. Economists were looking for 56.8.
- Gold tumbled today, bringing mining stocks like Newmont lower.
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