Stocks fall on fears over central banks
David Russell | [email protected]
S&P 500 futures are down almost 0.25 percent, while European indexes are mostly lower. The big move occurred overnight in Asia, where Japan's Nikkei cratered 4 percent. Australian and Hong Kong indexes also fell sharply.
The S&P 500 has been hovering on either side of 1700 for more than two weeks following a strong rebound in early June. Economic data has also been remarkably strong, which gives investors potential reason to believe that the Federal Reserve and other monetary authorities will reduce stimulus measures. Today's losses in Germany, for instance, come despite better-than-expected industrial production in June.
Stocks fell earlier in the session after the Bank of England simply mentioned interest rates, though it made no strong comments about when they would rise. The move is similar to price action in May when investors interpreted innocuous comments by Fed Chairman Ben Bernanke as bearish. These reactions probably have less to do with the realities of policy and more to do with the fact that traders may look to take profits with the S&P 500 already up 19 percent for the year.
There are few other important events scheduled for the rest of the week, so trading could remain skittish and difficult to navigate.
Price action was also bearish yesterday as transportation stocks and small caps fell more than the broader market. Conservative sectors such as consumer staples and healthcare outperformed, while materials, financials and industrials lagged.
Foreign-exchange trading is cautious today, with the Australian and Canadian dollars both lower while the safe-haven Japanese yen is up across the board. Commodities are painting a similar picture as copper and silver fall more than 1 percent. Oil is modestly lower as well.
In company-specific news Walt Disney fell almost 2 percent after revenue missed and management said it would lose as much as $190 million on the failure of its "Lone Ranger" film. Computer Sciences rose on a strong earnings report and Finisar continued the stream of positive news in the telecom-supply space by raising its outlook. First Solar and Avis Budget, however, fell.