S&P 500 Has Longest Drop Since July Amid Europe Concern (Bloomberg)
U.S. stocks fell for a fifth day, sending the Standard & Poor’s 500 Index to its longest retreat since July, amid growing concern that Europe’s debt crisis is worsening. Stimulus continues to be added and yet there is no meaningful improvement in the global economy, said Sean Lynch, investment strategist for Wells Fargo Private Bank. Stocks worldwide fell as Germany, the Netherlands and Finland announced late yesterday that Spain should bear the cost of problems in their banks, with the European Stability Mechanism assuming only a limited burden in recapitalizations. The Bank of Spain said the economy kept falling at a “significant pace” in the third quarter. “We’re afraid when reality sets in that this economic recovery may take longer than expected, the market could pull back quickly and meaningfully.” said Eric Thorne at Bryn Mawr Trust Company.
World Stocks Expected to Edge Higher by Year-end: Reuters Poll (Reuters)
Central bank cash filtering through financial markets will nudge global stocks higher between now and year-end, Reuters polls showed on Wednesday, with gains in the first half of next year likely to be more modest. All but one major index — crisis-hit Spain’s — was expected to be higher at the end of December than it is now. Still, the overall tone of the survey was cautious in comparison with previous polls, even among notoriously over-optimistic equity strategists. “I’ve never been faced with a time in my career where the next six months were so critical and that includes the crisis of 2007-08,” said Peter Gibson, chief portfolio strategist at CIBC World Markets. U.S. stocks also look set for some low-key months ahead, having achieved double-digit gains so far this year. The S&P 500 SPX is expected to rise less than 3% between now and the end of the year. There was a palpable sense of uncertainty in forecasts for American stocks, partly reflecting the presidential election coming in November. The fiscal cliff was foremost among worries for U.S. stock watchers.
Greece Is Better Investment Than China Right Now (CNBC)
Greece may be in flames, but its stock market is doing quite nicely. While Greece’s battle to combat its deficit, secure aid and implement austerity measures has roiled global markets since the start of the European debt crisis, its benchmark stock market index is set to end 2012 sharply in the black. As of Wednesday, the Athens Composite Index had rallied 11.65% since the start of 2012, comparing favorably with “core” European countries’ indexes, such as France’s CAC 40, which is up 11.20%. However, Athens’s rally becomes more striking when contrast with China’s benchmark index, the Shanghai Composite, which has dropped 7.61% since the start of this year.
Oil Under $90, Off More Than 2% on Europe Worries (Marketwatch)
Oil futures struggled to hold on to $90 a barrel Wednesday, less than two weeks after topping $100, under pressure from renewed concerns about the euro zone and as a surprise decrease in inventories failed to lift prices. “Concerns that QE3 is not enough are starting to re-emerge,” said Gene McGillian, a broker and analyst at Tradition Energy in Connecticut. “The renewed escalation of the debt crisis in the euro zone, with violent protests in Spain against the planned new austerity measures, has sparked gloomier sentiment on the financial markets once again and is also putting oil prices under pressure,” analysts at Commerzbank said in a note.