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MARKET WRAP – STOCKS SWOON

Stocks lost 2% on the day as investors began to question the bailout plan implemented earlier this week by the EU.  The Euro continued to tank, losing 1.4% on the day and over 3.5% for the week.  Even at $1.238 the currency appears grossly overvalued and at risk of substantial downside.  The EU is doing little to slow the decline.   Volume was very high – a characteristic of the recent sell-offs.  Breadth was firmly negative at almost 7:1.

All in all, stocks were still huge winners on the week with gains of over 2.3%.  Monday’s 4% rally accounted for nearly all the week’s gains.  Investors were eager to snatch up shares heading into the weekend as the S&P rallied almost 1% into the close – well off its 3:30 lows of -3%.  Investors are hoping for the 5th consecutive Sunday Greek bailout and another Monday Melt-up.  If today’s last 30 minutes are a contrarian indicator we could see sellers at the open on Monday.

From Daily Futures:

Currencies
Is the Euro zone unraveling? There were unconfirmed reports that Sarkozy threatened to pull France out of the Euro zone last week when tensions were running high. The June euro fell 1.78 cents to a new contract low of $1.2387. Today’s market felt like a liquidity crunch with most commodities closing lower.

U.S. Economy
The U.S. Commerce Department said that retail sales were up .4% in April, a little better than expected.

The Federal Reserve said that industrial production was up .8% in April and up 5.2% from a year ago, slightly better than expected.

The University of Michigan’s consumer sentiment index increased from 72.2 to 73.3 in April, slightly less than expected.

The June U.S. T-bonds jumped up 1.16/32nds to 122.01/32nds, seen as a safe haven while Europe continues to struggle with its debt problems. The June 2011 eurodollars were up .04 at a new contract high of 98.775.

Grains and Cotton
The USDA said that Japan bought 100,000 tons of U.S. corn for the current season. July corn closed down 9.5 cents at $3.635.

The National Oilseed Processors Association said the soybean crush totaled 131.7 million bushels in April, less than expected. July soybeans closed down 11 cents at $9.535.

Livestock
August cattle dropped 2.65 cents to 92.00, the lowest close in four weeks, hurt by today’s broad-based commodity selling and lower stock market.

After the close, the USDA estimated this week’s beef production at 504.0 million pounds, down 2.8% from a year ago. Pork production was estimated at 397.9 million pounds, down 5.8% from a year ago. August hogs were down 1.25 at 83.50, the lowest close in six weeks.

Cocoa
July cocoa closed down $101 at $2,812, pressured again by Europe’s problems and the rising U.S. dollar.

Coffee
July coffee closed down 2.80 cents at $1.3430, partly due to the higher U.S. dollar, but also because Brazil has a large coffee crop this year.

Energies
July crude oil fell $3.56 to $75.43, the lowest close in 13 weeks, much of it due to fears about Europe’s problems.

Metals
August gold, one of the proclaimed “safe havens” finished down $1.40 at $1,229.60 while selling in the euro turned ugly.

July copper fell 9.75 cents to $3.1340, hurt by Europe’s problems and today’s lower stock market.

More Currencies
Statistics Canada said that manufacturing sales were up 1.2% in March and up 10.2% from a year ago, at C$44.5 billion, slightly more than expected. Also, new vehicle sales were down 4.2% in March.

The June Japanese yen closed up .0074 at 1.0848, while Europe’s problems make it hard to be short the yen.

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