Stocks were crushed on the afternoon as investors feared the potential contagion of Eurozone debt and traders prepped for tomorrow’s big jobs report. The S&P 500 lost 3% on the day. Volume was extremely high and breadth was very negative at 5:1. Today’s action had a very sinister feel to it – not unlike the day’s leading up to the demise of Lehman Brothers. Spreads on CDS are blowing out as Greece hits 420+ and Portugal hits 230. The failed auction in Portugal has traders very concerned over a potential tsunami of debt problems in Europe. In addition, recent jobs data has investors concerned about another poor employment reading tomorrow morning.
From Daily Futures:
The March U.S. dollar index closed up .525 at 80.07, the highest close in six months, boosted by increasing concerns over debt problems in Europe. Most commodities finished the day lower.
The U.S. Labor Department said that jobless claims were up 8,000 last week to 480,000, more than expected. The March 2011 eurodollars closed up .075 at a new contract high of 98.66.
The Labor Department also said that non-farm business productivity increased at an annual rate of 6.2% in the fourth quarter of 2009. Unit labor costs were down 2.8% in the fourth quarter from a year ago. Tomorrow, the Labor Department will release the monthly unemployment figures.
The U.S. Commerce Department said that factory orders were up 1.0% in December, a little better than expected.
Grains and Cotton
The USDA said that, as of last week, 2010-2011 exports of:
Corn improved from up 4% to up 6% from a year ago.
Soybeans fell from up 43% to up 41% from a year ago.
Wheat improved from down 27% to down 26% from a year ago.
Cotton improved from down 33% to down 31% from a year ago.
March cotton closed down .83 at 68.99.
The USDA said that 110,000 tons of U.S. corn was sold to South Korea. Grains, in general, were lower for most of the day, but closed higher. March corn ended up two cents at $3.55.
July wheat closed up 6.75 cents at $5.022, supported by this year’s USDA expectations for a smaller winter wheat planting.
The USDA said that net sales of beef totaled 16,100 tons last week, up from 13,700 tons the previous week. April cattle were only down .02 at 90.07, better than most.
Lumber – Today’s Exception
One of the few commodities that did not sell off today is lumber. March lumber closed up $10.00 at $279.00, the highest level in over a year.
Colder temperatures are on the way to central Florida this weekend, but no significant freezing is expected. March orange juice closed down 2.35 cents at $1.3725.
The U.S. Department of Energy said that underground supplies of natural gas were down 115 billion cubic feet last week to 2.406 trillion cubic feet, a little more than expected. Supplies are now up 9% from a year ago. March natural gas ended down .3 cents at $5.416.
March crude oil fell $3.84 to $73.14, caught in today’s broad-based liquidation of commodities.
Metals – Is The Bull Market Over?
April gold dropped $49.00 to $1,063.00, the lowest close in four months, pressured by today’s stronger U.S. dollar. March silver fell 96.7 cents to $15.35, the lowest close in five months.
Australia’s Statistics Bureau said that retail sales were down .7% in December, weaker than expected. The March Australian dollar closed down 1.64 cents at 86.28.
Statistics Canada said that building permits totaled C$6.2 billion in December, up 2.4% from November and up 32.6% from a year ago.
The European Central Bank kept its interest rate unchanged at 1.0% today, as expected. The Bank of England also kept its rate unchanged at .50%, but also said that it was putting its program of quantitative easing on hold for now.
The March euro dropped 1.59 cents to $1.3743, the lowest close in over eight months, with increasing concerns about debt problems in Greece, Portugal, and Spain.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.