U.S. Stocks Drop on Growing Spanish Woes

Closing the Week with Forexpros

by Forexpros Staff

U.S. stock prices dropped on Friday after the yield on Spanish government debt soared on news the country will spend next year in recession, wiping out a three-day rally on Wall Street.

At the close of U.S. trading, the Dow Jones Industrial Average ended down 0.93%, the S&P 500 index was down 1.01% while the Nasdaq Composite index was down 1.37%.

Spanish Treasury Minister Cristobal Montoro said earlier that the recession gripping the country today will extend into next year, with gross domestic product falling 0.5 percent in 2013 instead of expanding 0.2 percent as originally forecast.

The news sent yields in Spanish government debt markets soaring to above 7%, a level deemed unsustainable by markets and illustrating a country in need of a bailout.

Investors flocked to safe-haven asset classes as part of a risk-off trading session, which sent stocks falling.

Earnings season is underway, though some traders sold on concerns that while profits have met expectations, some revenue estimates have not, which further sent stocks declining.

Leading Dow Jones Industrial Average gainers included Wal-Mart Stores, up 1.05%, General Electric, up 0.35%, and Chevron Corp., up 0.34%.

Leading Dow Jones Industrial Average decliners included Hewlett-Packard, down 2.51%, Bank of America, down 2.48%, and United Technologies, down 2.10%.

European indices, meanwhile, finished down.

After the close of European trade, the EURO STOXX 50 fell 2.83%, France’s CAC 40 fell 2.14%, while Germany’s DAX 30 finished down 1.90%. Meanwhile, in the U.K. the FTSE 100 closed down 1.09%.

In currencies, the dollar firmed as U.S. trading on Friday ended with the EUR/USD down 0.96% at 1.2163.  The EUR/JPY had an even bigger move and hit 95.38, down 1.18%, just above a low of 95.35, a low not seen since 2000, and off a high of 96.68.

Gold prices rose on Friday on reports the Russian central bank has been adding to its reserves of the precious metal.  On the Comex division of the New York Mercantile Exchange, gold futures for August delivery were up 0.29% and trading at USD 1,584.95 a troy ounce, up from a session low of USD 1,572.95 and down from a high of USD 1,586.65 a troy ounce early during the session.

Oil declined Friday. On the New York Mercantile Exchange, light, sweet crude futures for delivery in September traded at USD 91.42 a barrel on Friday, down 1.67%, off from a session high of USD 92.62 and up from an earlier session low of USD90.94.

Natural gas futures traded higher during U.S. morning trade Friday, bucking the overall commodity selloff, as Thursday’s report from the U.S. Energy Information Administration indicated U.S. gas supplies rose less-than-expected last week.  On the New York Mercantile Exchange, natural gas futures for delivery in August traded at USD 3.018 per million British thermal units during U.S. trade, gaining 0.63%.

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