Stocks Tank As Fed Worries Carry Over Into A New Week

Michael Teague |

BernankeAfter rushing out of the gate and nearly over the cliff, with indices down almost 2 percent across the board after the opening bell, stocks crawled back to pare losses on Monday as markets around the world continue to react to the Federal Reserve’s about-face on fiscal stimulus.

Fed Chairman Ben Bernanke’s announcement last Wednesday that the central bank was considering withdrawing from its supporting role in the U.S. economy as early as this fall sent exchanges around the world into a tailspin. The announcement was compounded by a statement over the weekend from the the Basel, Switzerland-based Bank for International Settlements, essentially an organization composed of the world’s central banks, warning the world’s governments that higher bond yields and increasing interest rates would have a devastating impact on the global economy.

The BIS cautioned against anything but the most cautious withdrawal of the Fed from the U.S. economy, and also seemed to attempt to push back against the recent world-wide backlash against economic austerity programs, as it cited debt as one of the major barriers to economic growth.

The week ahead will be full of economic data points and talks from Fed officials. Eight regional Federal Reserve Bank Presidents and Board Governors will give talks in various locations around the U.S. and the world. Meanwhile, Tuesday alone will see the release of data on durable goods orders, the S&P Case-Schiller Home Price Index, new home sales, and consumer confidence, with a smattering of other data to be released later in the latter half of the week.

Wall Street paired early losses slightly, with the S&P 500 closing down 1.21 percent to 1,573.09 points, the Dow down almost 1 percent to 14,659.56 points, and the Nasdaq off 1.09 percent to end the first day of the week at 3,320.76 points. The Dow is some 6 percent off its all-time high in May, while the S&P 500 has dropped around 7 percent from that time.

Some of the Dow’s components were able to withstand the day’s bloodbath, however, with Johnson & Johnson (JNJ) up 2.5 percent, followed by Microsoft (MSFT), Unitedhealth Group (UNH) and Wal-Mart (WMT).

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Companies

Symbol Name Price Change % Volume
DB25 Deutsche Bank AG 4.500% Fixed Rate Sub Tier 2 Nts n/a n/a n/a 0
JNJ Johnson & Johnson 117.78 -1.03 -0.87 5,998,854
MSFT Microsoft Corporation 56.90 -0.53 -0.92 21,689,720
UNH UnitedHealth Group Incorporated (DE) 139.72 -0.79 -0.56 2,636,458
WMT Wal-Mart Stores Inc. 71.62 -0.73 -1.01 5,948,719

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