US Credit Rating Cut by S&P

Equities

Wall Street’s Thursday woes led to a steep drop in Asian markets on Friday. The Nikkei fell 3.7% to 9305, and similarly, the Kospi dropped 3.7%. Oil-related stocks were hit hard, following a steep drop in crude oil. Australia’s ASX 200 tumbled 4% to a 2-year low, and the Hang Seng shed 4.3%. China’s Shanghai Composite fared better than most, losing just 2.2%.
European markets extended their losses, as the FTSE fell 2.7%, the DAX dropped 2.8% and the CAC40 decline 1.3%. The oil and gas sector fell 3.4% on concerns about economic growth, and Royal Bank of Scotland tumbled 6.9% after reporting a loss of $1.1 billion.
US stocks swung wildly, as the market digested an upbeat jobs report. The Dow initially opened up more than 170 points, and from that point dropped more than 420 points before reversing to close up 61 points. The S&P 500 closed down .7% and the Nasdaq ended with a loss of .9%. For the week, the S&P 500 fell 7.2% and the Nasdaq dropped 8.1%, their steepest losses since November 2008.

Dow Swings more than 400 Points
Priceline shares jumped 9% on strong earnings which beat forecasts.

Treasuries and Commodities

After the close, S&P cut the US credit rating to AA+ from AAA, a move the White House labeled hasty.

The Crashing Trader

Treasuries sold off, as rumors of the credit cut weighed on fixed income. 10-year notes fell 1 12/32 to yield 2.56%, and 30-year notes plunged 3 11/32 to yield 3.85%.
Gasoline futures jumped 2.5% to 2.8052, while crude oil inched up .3% to 86.88, recovering from an earlier drop down to 82.87
Metals continued to decline, as silver fell 3.1% to 38.21, gold dropped 7.20 to 1651.80, and copper lost 2.8% to 4.117.

Currencies

The Euro surged 1.4% to 1.4290 as Italy announced steps to react to the country’s debt woes. The Pound gained .8% 1.6391, and the Yen advanced 1% to 78.42, while the Swiss Franc and Canadian Dollar closed little changed.

Economic Outlook

Big Ol' Dollar Sign, USD

Non-farm payroll data showed the US economy gained 117K jobs in July, far better than the 89K forecast, and the unemployment rate dipped to 9.1%. This was the first upbeat jobs report since April.
Consumer Credit jumped 7.7% in June, a positive sign of consumer confidence.


An emergency meeting was held over the weekend between global financial officials, to address the debt troubles facing the US and Europe.


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