4:00 PM New York – U.S. stocks lost steam in the final hour of trading and China cut rate unexpectedly and Spain completed the sale of long term bonds. The mood in New York turned cautious after tech stocks failed participate in the broader rally. Gold tumbled.
Stocks wavered in New York trading after jobless claims declined and Fed Chairman offered cautious assessment of the economy that failed to offer any new insights in the economic dynamics.
Investors were optimistic before the market open after China lowered its key lending rate unexpectedly as the world economy softened and also offered more freedom to banks to set deposit and lending rates.
However, the early optimism faded after Fed Chairman Bernanke highlighted risks stemming from the slow moving crisis in the euro zone and told lawmakers the central bank has options to ease more if needed but did not specify timing or specific steps.
In corporate news, Best Buy founder resigned as chairman of the electronics retailer and plans to explore stake sale in the retailer. American Greetings acquire UK based Clinton Cards. Lululemon dropped after the retailer offered weaker outlook. Molina Healthcare withdrew current year earnings guidance. J. M. Smucker fourth quarter net increased 9.7% to $104 million.
European markets advanced after political leaders stepped up activities that may lead to direct lending to Spanish banks. IMF officials estimate as much as €40 billion capital needed by Spanish banks. UK holds interest rates and unemployment rises in France and Greece.
Nikkei index in Japan gained for the third day in a row and traders prepared to square stock options tomorrow. Talks of direct lending to Spanish bank for the European leaders lifted market sentiment.
Australian stocks advanced for the third day in a row after the latest jobs report showed healthy gains in May. Employers added 50,000 net new jobs in May after adjusting for seasonal factors and unemployment rate held steady at 5.1%.
Commodities, Bonds and Currencies
The yields on 10-year U.S. bond were flat at 1.65% and 30-year U.S. bond edged up to 2.75%.
The U.S. dollar edged down 0.5% to $1.259 to one euro and gained against the Japanese yen to 79.66 in New York trading.
Immediate delivery futures of Texas crude oil decreased 77 cents to $84.25 a barrel and Brent crude futures fell $1.04 to $99.58. Futures of natural gas decreased 0.15 cents to $2.27 per mbtu and gasoline price decreased 1.5 cents to 267.57cents a gallon.
In metals trading, copper decreased 1 cent to $3.36 per pound, gold decreased $44 to $1,590.20 per ounce and silver fell 94 cents to $28.41.