Equities started the day up well over a percent but that was very short-lived as the markets quickly fell on a slew of bad economic news. By the end of the day, however, the equity markets were able to recover and posted only small losses on the day. The Dow Jones Industrial Average fell 24.04 to 8,739.02 for a loss of 0.27% while the Nasdaq Composite and the S&P 500 Index fell 7.05 and 3.28 to levels of 1,853.08 and 939.15, dropping 0.38% and 0.35% respectively. One of the reasons that the markets sold off was due to a weak U.S. Treasury auction on $19B worth of 10-year notes. The bid-to-cover ratio on the auction was 2.62, but with a coupon rate of 3.125% and a yield awarded of 3.990% the market was caught off guard and began to sell off.
Crude oil was trading up after hours touching $71.87 a barrel after hours after increasing during the trading day. Gold was trading at $955.20 an ounce after hours and copper had moved down to $2.36 a pound. Commodities across the board have sustained a nice sized rally, mostly due to the continuing weakness in the U.S. Dollar as opposed to supply and demand type fundamentals.
Internal congressional investigations that had their results released today showed that members of the Federal Reserve told Bank of America (BAC: 11.98 0.00 0.00%) CEO Kenneth Lewis that they would push to oust him from his position if he did not follow through with his planned acquisition of Merrill Lynch & Co. Many investors and insiders had believed this to be true for a long time and believe that because Lewis complied with the Federal Reserves wishes that Bank of American is in good graces with the Federal Reserve and the Obama administration.
In international financial news, financial deputies from both Russia and Brazil announced that they would each purchase at least $10B worth of bonds from the International Monetary Fund in order to diversify their sovereign reserves. Russian financial authorities have been extremely vocal when it comes to criticizing the fiscal and monetary policy of the United States recently, and countries around the world are wondering if their U.S. Treasuries are safe or if they will devalued at a rapid pace in order to help monetize the growing debt problem that America faces. Many foreign authorities are also commenting on the size of the deficit and the growing level of public debt to gross domestic product in the United States which will approach a ratio of .70 by the end of next year.
Please join us tomorrow for another market recap, have a great night.
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