Yesterday’s DJIA decline of 279.65 points was the largest drop since June 2010. The Dow closed at 12,290.14 with each of the 30 blue chips closing down. Chalk this one up to disappointing financial news which fueled worries of a double dip recession. Declining consumer confidence, lower than expected factory orders coupled with disappointing employment numbers led to a broad market sell-off.
Treasury yields fall
The benchmark yield on 10-year Treasury notes dropped below3% yesterday. Last month’s poor economic news caused prices on notes to rise 1.6% in May, the best performance since August2010. The Financial Times notes that slow job growth in the U.S., if it continues, will serve as a drag on bond yields and they may even drop to2.5% in the near future.
A sobering report in the Financial Times observes that wholesale demographic and economic shifts in the U.S. working population caused by the Recession may affect the U.S.’s ability to fully recover. From a high of 67% in 2000, the percentage of workers has slid to 64%. Since the 1960’s, the percentage of people in the U.S. that work has consistently risen. Job turnover has also slowed, according to the same report, which has resulted in a rise in long-term unemployment. Importantly, the report cited data which showed that U.S. workers generally expect their income in six months to be lower than it is today – a major shift in outlook from previous recessions.
Autos shift into neutral
The auto industry’s fragile recovery stalled in May. High fuel prices, a shortage of parts from Japan and over-arching economic concerns kept buyers away from showrooms last month and resulted in 3.7% fewer new cars sold compared with a year ago. USA Today’s report also noted that pickup truck sales were especially weak which pulled down sales as a whole. One bright spot - new models from GM, VW, Ford and Hyundai sold well as did redesigned Explorers and Jeeps.
Hackers raise concerns
Once again, hackers from China have attacked Google – this time through its Gmail service. The company has uncovered a hacking scheme originating out of Jinan, China which duped people into sharing their passwords. The Wall Street Journal reports that the campaign was targeted at specific people and sought to infiltrate their Gmail accounts to harvest information. The incident underscores the risks in sharing private information via email and shines a spotlight on security of the Internet in general.
Outbreak in Europe
Following an outbreak of e. Coli poisoning in Germany which has sickened more than 1500 people, Russia has banned all imports of European produce. Fifteen people have died and others have contracted a kidney complication due to this new strain of bacteria which the World Health Organization has deemed usually virulent. Early investigations point to Spain as the source of the bacteria and the Spanish government has been quick to defend its exports.