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U.S. Stocks Decline After S&P 500 Climbs to Record High

*from www.bloomberg.com, May 10, 2013 (To view original article click here.)

Take Away #1: The Dollar Index extended its biggest two-day rally since July.

Key Facts and Figures:

  • The Dollar Index, a gauge of the currency against six major peers, added 0.6% to 83.27 at 12:37 p.m. in New York to extend its two-day advance to 1.7%.
  • The yen weakened beyond 101 per dollar for the first time in four years.
  • The U.S. dollar strengthened against all 16 major peers, climbing more than 1% vs the currencies of New Zealand and South Korea.

Take Away #2: The rally in the Dollar Index triggered plunges in oil and gold.

Key Facts and Figures:

  • Gold, oil and silver helped lead losses in 21 of the 24 commodities tracked by the S&P GSCI Index, sending the gauge down as much as 2.2%.
  • Oil and gold slid more than 2% while wheat and corn tumbled following a U.S. crops report.
  • Gold for June delivery tumbled 2.5% to $1,432.60 an ounce.
  • West Texas Intermediate oil dropped 2.1% to $94.34 a barrel.
  • Rubber jumped 6.1% in Tokyo, on the yen’s drop against the dollar.
  • The stronger dollar caused declines in prices of materials denominated in the U.S. currency.

Take Away #3: “Commodities are taking a hit because the dollar is ripping,” said Bob Yawger at Mizuho Securities USA Inc.

Key Facts and Figures:

  • “The Dollar Index crossed 83, which is hurting these markets,” Yawger said.
  • Wheat fell 2.7% and corn declined 2.5%.
  • Corn inventories in the U.S., the world’s largest grower and exporter, may more than double as farms recover from the drought in 2012 to produce the biggest crops ever.
  • The harvest this year will surge 31% from 2012 to 14.14 billion bushels (50.91 million metric tons), the U.S. Dept. of Agriculture said today.

Take Away 4: Treasuries tumbled amid improving confidence in the strength of the U.S. economy.

Key Facts and Figures:

  • Ten-year Treasury yields increased eight basis points to 1.89%, the highest since April 1.
  • U.S. jobless claims yesterday fell to a five-year low, bolstering optimism in the economy.
  • Group of Seven finance chiefs and central bankers meet today in the U.K. for talks.

Take Away #5: U.S. stocks retreated, trimming a third weekly gain.

Key Facts and Figures:

  • The S&P 500 Index swung between gains and losses.
  • The S&P 500 retreated 0.4% yesterday after reaching a record for five straight days.
  • The index is up 14% this year and has surged more than 140% since its bear-market low in 2009 amid earnings growth and monetary stimulus from the Federal Reserve.

Take Away 6: Energy and commodity stocks posted the biggest declines out of 10 S&P 500 groups, while health-care and consumer shares led gains.

Key Facts and Figures:

  • Financials shares were little changed.
  • Gap Inc. added 5% after forecasting first-quarter profit that topped estimates.
  • Nvidia Corp. rose 4.2% as fiscal first-quarter sales and earnings exceeded projections.
  • Molycorp. Inc. jumped 20% after posting a narrower-than-estimated loss.
  • Hess Corp. sank 2.1% after saying it will strip its CEO of the chairmanship.

Take Away #7: Federal Reserve Chairman Ben S. Bernanke said risks persist in wholesale funding markets used frequently by Wall Street brokers to finance securities trading.

Key Facts and Figures:

  • Important risks remain in the short-term wholesale funding markets,” Bernanke said today in a speech at a Chicago Fed banking conference.
  • “One of the key risks is how the system would respond to the failure of a broker-dealer or other major borrower,” Bernanke said.

Take Away #8: The Stoxx 600 advanced 1.3% this week, a third straight week of gains.

Key Facts and Figures:

  • The European gauge climbed for a fourth day as ArcelorMittal and BT Group Plc reported earnings that topped estimates.
  • The world’s biggest steelmaker rallied 4.2%, the most since January.
  • The U.K. phone company jumped 12%, the biggest gain in almost four years.

Take Away #9: The MSCI Emerging Markets Index fell 1% today, the most in three weeks, as the weaker yen threatens developing-nation exporters.

Key Facts and Figures:

  • The yen has tumbled 23% since September and is headed for its biggest annual loss since 1979.
  • This as Prime Minister Shinzo Abe and the Bank of Japan boost the supply of the currency to beat deflation.
  • South Korea’s Kospi index dropped 1.8%, the most since July 23 on a closing basis.
  • South Korea’s biggest exporter of consumer electronics, Samsung Electronics Co. slid 2.6%.
  • The won depreciated 1.3% vs. the dollar, the most in three months.
  • This on speculation South Korean authorities will favor depreciation to support exporters as the yen’s decline makes Japanese rivals more competitive.
  • Thailand’s baht weakened 1.1% against the dollar.
  • Finance Minister Kittiratt Na-Ranong said today the Bank of Thailand should reduce its benchmark rate by more than a quarter of a percentage point or implement capital controls to stem baht appreciation.

Take Away #10: The yen breached 100 per dollar yesterday for the first time since April 2009.

Key Facts and Figures:

  • Analysts predict a year-end exchange rate of 105, according to the median of more than 50 estimates compiled by Bloomberg.
  • Japan’s currency slid 0.5% to 131.82 per euro and touched 132.26, its weakest level since January 2010.
  • The Australian dollar fell below parity for the first time since June, dropping to as low as 99.61 U.S. cents.
  • The Swiss franc fell to the lowest since January against the euro amid reduced demand for haven assets.
  • Norway’s krone strengthened against all but three of its 16 major peers after a report showed inflation accelerated in April.
  • Japan’s 10-year yield climbed 10 basis points to 0.70%.
  • The yield on similar-maturity German bunds increased 10 basis points to 1.37%.
  • Bonds of the Co-Operative Bank Plc tumbled after Moody’s Investors Service yesterday cut the lender’s rating six steps to sub-investment grade.
  • Moody’s cited the potential for losses on real estate loans and Co-Op’s low levels of provisions for future impairments.
  • The company’s 9.25% subordinated notes due April 2021 plunged 29 pence on the pound to 73 pence, according to Bloomberg pricing data.
  • The securities, issued in April 2011, have been quoted above par since July.

*To view original article from www.bloomberg.com click here.

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