Daily Market Commentary for August 1, 2011
Threat of U.S. defaulting on its debt caused a lot of damage to confidence. (read more at Millennium-Traders.Com) http://www.millennium-traders.com/news/newscommentary.aspx
Wall Street was not pleased with economic data released. The Commerce Department reported personal income increased a seasonally adjusted 0.1%, the smallest gain since last November. Government payments for social programs such as Medicaid and unemployment compensation attributed to half of the increase noted. During the month of June, Americans spent less as cautious consumers reacted to the slowing economy with little evidence of any sharp rebound in sight. Marking the first decline in nearly two years, spending by consumers dropped 0.2%. Consumer spending is the single largest contributor to the U.S. economy, accounting for as much as two-thirds of growth. Personal consumption fell less than 1% in June when adjusted for inflation. The individual savings rate for June jumped to its highest level of 2011, 5.4% of disposable income, up from 5.0% in May. During the month of June and July many businesses and consumers sat on the sidelines awaiting lawmakers resolution to the debt ceiling debate. Inflation declined 0.2% during June which is likely a reflection of a drop in oil prices. The PCE inflation index climbed 2.6% over the past year. Core PCE rose 0.1% indicating an elevation in many consumer goods excluding - volatile food and energy costs. Over the past 12 months, Core PCE has risen 1.3% vs. expectations of an increase by 0.2%. Revised data by the government: consumer spending in May showed an increase of 0.1%; personal income in May was revised down to an increase by 0.2%.
The currency markets watched as the Swiss Franc (100 centimes per franc) soared to a record high vs. the euro and trading against the U.S. dollar, near an all-time high as global growth worries and debt concerns on both sides of the Atlantic fueled safe-haven flows. The euro suffered losses across the board as the yield on Spanish and Italian government bonds soared to euro-era highs well above 6%, on fears that a global growth slowdown will undercut efforts by those countries to get their public finances in order. The dollar fell to 77.09 centimes versus the Swiss franc a loss of nearly 1% and very near a record low. The euro dropped to an all-time low of 1.0957 Swiss francs. The Japanese yen also gained, with the dollar losing about 0.5% and the euro trading down 0.9%.
Insmed (INSM) shares were down by 47% into early afternoon trading after U.S. Food and Drug Administration halted clinical trials for its inhalable antibiotic after it reviewed early results from long-term tests on rats.
Parker Hannifin (PH) shares sank by 6% into early afternoon trading after fiscal Q4 earnings came up shy - by a penny - of Wall Street expectations.
Coach (COH) shares were off by 6% into early afternoon trading after reporting gross margin fell short of Wall Street expectations even though its profit and sales topped analysts' estimates.
MetroPCS Communications (PCS) shares sank by 32% after reporting a decline in operating margins.
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