Photo: Wikimedia Commons
After diving for 8 out of the last 9 days, today the market finally “puked” in action that brought back scary memories of the financial crisis.But first, the scoreboard:
S&P 500: -135.78
And now, the top stories:
- Today needs a little bit of backstory. Prior to yesterday, markets were riding an 8-day losing streak. Yesterday they bounced back a bit, as chatter about QE3 turned a huge loss into a mediocre gain.
- Unfortunately for the bulls, that was all transitory. Things got off to a bit of a bang last night, when Japan intervened at 9 PM ET to weaken the yen. It was the second currency intervention of the day (the Swiss National Bank had intervened 18 hours earlier), and between the two moves, the dollar went on a huge rally.
- Still, other non-currency markets were mostly quiet in the early going. Europe even started off higher. But that didn’t last long, and once things got moving the selloff came fast and hard. Italy (as is usually the case these days) bore the brunt of the selling, though Europe’s “core” is not immune. At 8:30, Jean-Claude Trichet gave his press conference, and didn’t say all that much. Yes, he acknowledged the option to to more periphery bond buying (and that briefly gave the market a bid) but he didn’t announce a willingness to do anything on the scale to really calm people down.
- Markets only got worse after his press conference. Also at 8:30, there was a benign initial claims report in the US. That didn’t move the market one way or another. When it comes to data, everyone’s just waiting on tomorrow’s big show, the non-farm payrolls report.
- Meanwhile, the horror show continued in Europe. Technical problems hit both the Italian and French markets, causing people to freak out more. In the end, Italy’s FTSE MIB was down a whopping 5.1%. France was down nearly 4%.
- (Speaking of freaking out, did you catch Brazil today? The Bovespa — fell one of the worst performing markets in the world — fell over 5%.)
- Ominously, there was almost no relief at any point in the day. Nobody ever looked tempted to step in and catch the proverbial falling knife. Treasuries caught huge bids all across the curve, as yields in the US plunged.
- There was telling action in gold today. Initially it surged as part of the general PANIC mode, but in the middle of the day it reversed amid a flight to cash.
- As for what’s next: Tomorrow is the big non-farm payrolls report, and then next week is Bernanke. QE3. Probably in the bag.
- For some more thoughts on what’s exacerbating the carnage, see here >