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Latest Stock Market News and the Spanish Debt Crisis continued.
For latest stock market news, in a comparatively light trading day on Wall Street stocks continued to slide as fears concerning the global economy wound on and news from China signaled a further slowdown.
The Dow Jones finished .28% lower while the Standard and Poor's 500 index and the Nasdaq Composite Index finished down .16% and .19% respectively. Concerns over global debt management and the slowdown in China grew yesterday as data released from the world's second largest economy showed that the inflation rate was indeed dropping, with it now standing at a twenty nine month low. Analysts are using this as an indicator of further slowdown in the Chinese economy and a gauge illustrating less demand and therefore fewer imports from somewhat dependent countries like America and the European continent. In conjunction to this, we also had data released yesterday showing that machinery orders in Japan fell at a record pace, once again illustrating a slowdown in Asia.
Yesterday was also the first day for second quarter earnings season in the U.S. and many are anxiously waiting to see what effects issues like the China slowdown mentioned above and the continuing crisis in Europe will have on corporate America. Despite a relatively sound beginning yesterday with Alcoa Inc. coming out with slightly better than expected earnings, the tone is still decidedly negative with investors seemingly convinced this earnings season will be quite negative. Apparently corporate outlooks are at their worst in nearly four years with the majority of corporate America pointing the finger at Europe.
The Spanish Debt crisis looks set to continue and spread as Italian borrowing rates continued to rise yesterday. Finance ministers around Europe met to finally define and set deficit targets for Spain's latest bailout. While Spain was given an extra year to reach its deficit targets, other key areas of negotiation pertaining to the bailout for the bank rescue and emergency bond-buying still remained elusive. Those two aspects remain of key importance to markets and could be a leading reason why markets continue to decline.
Negotiations continued in Europe as well, to try and set up the guidelines for the new European banking supervisor as well as to using the European Blocs rescue capital to stabilize bond markets at a time when Span and Italy are clearly feeling the pinch. Once again though, it seems ingrained differences between the views of Northern European Countries and Southern states are making it extremely tough to come to an understanding. One point was agreed upon however and that was that the Eurozone crisis in now a lot worse than it was at the time of the Lehman crisis. I don't think that was much of a revelation.
Big Picture
For latest stock market news, it appears the vast majority out there have very low expectations regarding this second quarter earnings season particularly as the Spanish Debt Crisis grinds on. Continuing woes in Europe and now escalating concerns from China are being identified as the main drivers for the decline. With escalating borrowing costs for Italy and a halting decision making process, it appears as though things will continue at the current rate for the time being.
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