S&P and NASDAQ Finish Lower for the Month
December S&P and NASDAQ stock index futures finished lower for the month while the December Dow eked out a small gain. The closing price reversal tops in the S&P and NASDAQ indicate that the selling is greater than the buying at current levels and set up the possibility for a 2 to 3 month decline. Today’s sell-off was broad-based, which is another sign that the 10% to 20% correction that analysts have been anticipating may actually be taking place.
December Treasury futures rose as Bond and Note yields fell sharply on the stock market decline. Traders aggressively moved money from the higher risk markets into the lower-yielding but relatively “safe” fixed income markets. This week’s Treasury auction was well received as robust demand from foreign traders helped keep yields stable. Expectations are for T-Bonds and T-Notes to remain firm as long as fear continues to drive investors out of commodities and equities.
The U.S. Dollar posted a strong gain for the week, but finished the month slightly lower. The shift in sentiment from higher risk assets to the lower risk, lower yielding Dollar is an indication that investors may think the global economy is still fragile and that the recovery will be labored and rough.
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