Is A Double Dip In The Cards For Economy?
On the first day back from an extended
weekend thanks to the Labor Day
holiday, the markets suffered some heavy
casualties. Several factors having to do with the global economy hit the market
at the very beginning of trade and never let it come back.
First, overnight, Japan’s Nikkei fell to
its lowest level in 19 years after losing 3.2% in trading. In Italy, consumer
confidence fell to a three-year low. And third was the weaker than expected ISM
Index for August. This has raised concerns among traders and has them renewing
talk about a double-dip recession in the US economy.
The S&P 500 fell very close to the 3.0 Volatility Band (874) before closing at
877.70. The Sept. S&P 500 futures
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to close at 878.01, down 38.60, or -4.21%. Support is now at the 50% retracement
level of 867.80.
The tech-heavy Sept. Nasdaq 100 futures
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by the sliding semiconductors
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by 38, or 4.03%, at 905.
The treasury market was moved by talk that a possible dip back into recession
would cause the Fed to reduce interest rates at the next Fed meeting. This
pushed both the 10-year note and 30-year bond. The Sept 10-year note
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resistance level of 114.00. TYU2 closed at 114.42, up 1.25, or 1.10%.
The Sept. 30-year bond
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closing at 112.71, an increase of 1.84.
The energy markets got slammed today in response to Iraq’s Foreign Minister
stating that there was a possibility that U.N. weapons inspectors would be let
back into the Iraqi region, provided certain terms could be reached. Oil had
been rising on fears that oil exports from Iraq would be disrupted if the United
States decides to attack the region. October crude oil
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dropped 1.18, or 4.11%, to close at $27.78 a barrel. Oct. heating oil
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gasoline for October delivery
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74.51 cents a gallon. Natural gas for October
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down .16, or 4.89%.
At the Chicago Board of Trade (CBOT), where grains and beans are traded,
December wheat
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to $3.74 1/2 a bushel. Dec. corn
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$2.74 1/2 a bushel, and November soybeans
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5.25 cents.
In the precious metals, some traders found gold to be a safer investment than
equities, and this helped push December gold
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levels at $314.89 a troy ounce, an increase of 1.00. Dec. silver
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pound, a loss of 1.25, or 1.82%.