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Europe is ruining Thanksgiving for America.First, the scoreboard:
Dow: -236.2 pts, -2.1%
S&P 500: -26.5 pts, -2.2%
NASDAQ: -61.2 pts, -2.4%
And now, the top stories:
- Europe continues to get worse. But even the most bearish eurozone watchers were probably surprised by this morning’s failed German bond auction. Germany’s borrowing costs jumped, but they are nowhere near the crisis levels being experienced by Italy and Greece. Nevertheless, this reminds us that problems persist and are widespread in Europe. This morning, we also learned that September eurozone industrial orders fell 6.4%, which was much worse than the 3% expected. Another bad sign for Europe.
- Fitch and S&P joined the fray of credit rating agencies sounding alarms on France’s AAA rating. French bond yields jumped along with much of the borrowing costs across the European sovereigns. Here Are All Of The Reasons Everyone Is Freaking Over France >
- Even though there are much bigger fish (or turkeys) to fry in Europe, we shouldn’t forget about Greece. According to a WSJ source, Greece needs bailout money with 20 days or else it will default.
- And when you thought things couldn’t get any worse, China came out with some disappointing economic data. China’s HSBC flash November PMI number came in at 48, which indicates contraction. Have the odds of a hard landing increased? Experts are mixed. Jim Chanos remains bearish on China, while Jim Rogers is bullish.
- U.S. economic data wasn’t that great today, but there were no disasters. Initial jobless claims rose to 393k, which was higher than tht 390k expected. Durable goods orders declined 0.7%, which wasn’t as bad as the 1.0% expected. But nobody really likes to see a decline. Personal income jumped 0.4%, while spending climbed just 0.1%; economists were hoping for a 0.3% increase in both figures. Also, the University of Michigan consumer sentiment figure unexpectedly declined to 64.1. Analysts were hoping the figure would rise to 64.6.
- So, with Europe deteriorating, China slowing, and the U.S. struggling to get its legs, it’s no surprise that stocks sold off today.
- Banks underperformed the markets today. Sure, investors are still worried about the banks’ exposures to Europe. But the sector probably took an extra hit after finding out that they would be subject to new strenuous stress tests administered by the Federal Reserve. Under the black sky scenarios, the banks being tested would have to survive GDP falling at an 8% rate in Q1 2012, the unemployment rate spiking to 13% in Q1 2013, and the Dow tumbling to 5,700 in Q3 2012 among other things. Bank of America, Citigroup, and JP Morgan each fell 4%. Morgan Stanley fell 3.6%.
- Hot tech stocks sold off like crazy today. Groupon fell 15.5% to $16.96, which is well below its IPO price. Pandora shares tumbled 11.3% today following last night’s earnings announcement. Analysts weren’t impressed, downgrading the stock. Here Are 12 Of The Worst-Performing IPOs Of The Year >
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