Debate Politics Forums - View Single Post - U.S. Stocks Tumble: Some Comparisons from Past Recessions

donsutherland1 · 07-01-08, 11:15 PM

So far this week, the Dow Jones Industrials has avoided breaching Friday's closing low of 11,346.51, as well as the 11,331.62 figure that would mark the start of a Bear market. Tuesday saw the Dow Jones Industrials swing between a gain of 50 points to a loss of more than 166 points before that Index closed up 32.25 points.

Wednesday should feature a host of economic reports ranging from employment data to factory orders. The employment data from the ADP Employment Report and Challenger Job Cut report to be issued prior to the stock market's opening may provide a hint as to whether the stimulative boost from the tax rebates is helping firm up the job market.

Arguably the biggest reports could be the factory orders report and the Energy Information Administration's Petroleum Status Report. Right now, the consensus is for a 0.6% increase in factory orders. Given the recent spate of manufacturing-related data that proved somewhat better than market expectations, it is possible that a factory orders number that merely meets expectations could prove somewhat disappointing. The EIA's report could prove crucial in setting the tone for crude oil trading during the day. At present, the oil market remains on a trend that is biased toward higher prices. As of 11:15 pm EDT, crude oil was trading at $142.08 per barrel.

Should U.S. inventories prove lower than expected, oil could be poised to make a run at both its intraday ($143.67 per barrel) and closing ($140.97 per barrel) records. Given the role the enormous rise in oil prices has played in undermining stock market sentiment, bad news on this front could push the Dow Jones Industrials toward or below its June 27 low.

As the European Central Bank's highly anticipated interest rate hike for Thursday draws closer, that expected development could cast a shadow on currency trading. Hence, any weaker than expected figures in the data to be released on Wednesday could be inclined to push the U.S. dollar lower.

At the same time, attention to that anticipated interest rate hike could cause the markets to place renewed emphasis on inflation, inflation expectations, and the Fed's continuing accommodative monetary policy posture. The bad news coming out of Asia overnight on the inflation front will not be helpful. There, year-over-year inflation rates for June came to 5.5% in South Korea, 8.9% in Thailand, and 11.03% in Indonesia. In all three countries, the year-over-year rate rose strongly. The comparative figures for May were 4.9% in South Korea, 7.6% in Thailand, and 10.38% in Indonesia.

07-01-08, 11:15 PM	#22 (permalink)
donsutherland1 Moderator Mod team member Join Date: Oct 2007 Last Online: Today 09:01 PM Location: New York Posts: 2,211 Thanks: 694 Thanked 1,312 Times in 759 Posts Lean: Centrist Gender: Awards:	Re: U.S. Stocks Tumble: Some Comparisons from Past Recessions So far this week, the Dow Jones Industrials has avoided breaching Friday's closing low of 11,346.51, as well as the 11,331.62 figure that would mark the start of a Bear market. Tuesday saw the Dow Jones Industrials swing between a gain of 50 points to a loss of more than 166 points before that Index closed up 32.25 points. Wednesday should feature a host of economic reports ranging from employment data to factory orders. The employment data from the ADP Employment Report and Challenger Job Cut report to be issued prior to the stock market's opening may provide a hint as to whether the stimulative boost from the tax rebates is helping firm up the job market. Arguably the biggest reports could be the factory orders report and the Energy Information Administration's Petroleum Status Report. Right now, the consensus is for a 0.6% increase in factory orders. Given the recent spate of manufacturing-related data that proved somewhat better than market expectations, it is possible that a factory orders number that merely meets expectations could prove somewhat disappointing. The EIA's report could prove crucial in setting the tone for crude oil trading during the day. At present, the oil market remains on a trend that is biased toward higher prices. As of 11:15 pm EDT, crude oil was trading at $142.08 per barrel. Should U.S. inventories prove lower than expected, oil could be poised to make a run at both its intraday ($143.67 per barrel) and closing ($140.97 per barrel) records. Given the role the enormous rise in oil prices has played in undermining stock market sentiment, bad news on this front could push the Dow Jones Industrials toward or below its June 27 low. As the European Central Bank's highly anticipated interest rate hike for Thursday draws closer, that expected development could cast a shadow on currency trading. Hence, any weaker than expected figures in the data to be released on Wednesday could be inclined to push the U.S. dollar lower. At the same time, attention to that anticipated interest rate hike could cause the markets to place renewed emphasis on inflation, inflation expectations, and the Fed's continuing accommodative monetary policy posture. The bad news coming out of Asia overnight on the inflation front will not be helpful. There, year-over-year inflation rates for June came to 5.5% in South Korea, 8.9% in Thailand, and 11.03% in Indonesia. In all three countries, the year-over-year rate rose strongly. The comparative figures for May were 4.9% in South Korea, 7.6% in Thailand, and 10.38% in Indonesia.