U.S. Stocks plunged on worries of worsening European finances and the Euro hit its lowest level against the dollar in two months. The selloff continued into its fourth week, the Dow is down 155.34 to 12,357, Nasdaq is down 48.53 to 2,755, and the S&P 500 dropped 17.89 to 1,315.
Standard & Poor’s revised its outlook for Italy to negative from stable on Saturday. Fitch warned Belgium its rating may be downgraded if the government misses fiscal targets. Both come on the heals of a cut of Greece’s credit rating last Friday by Friday by three notches, taking it deeper into junk.
With the global upheaval, oil fell 2.43 to 97.67. However, investors seeking a safe haven bid gold up 9.33 to 1,516.72, its highest level in two weeks.
U.S. Treasury Secretary Timothy Geithner warned that if the debt ceiling is not raised by August 2, the government will not be able to spend more than it collects in revenue, forcing it to cut spending by about 35%. Items likely to be cut will be payments to contractors, soldiers’ salaries, social security, and Medicare. The Congressional Budget Office estimates cuts at a rate of $3.8 billion per day. According to the Wall Street Journal’s calculations, over a period of 95 days, those cuts will be enough to negate all the economic growth forecasted for 2011.
The Republican field of candidates is taken shape as more players announce their intentions. Indiana Governor Mitch Daniels emailed supporters on his decision not to run while former Minnesota Governor Tim Pawlenty officially entered the race in a video address. Gov. Mitch Daniels adds to the list of high profile potential candidates to drop of the running, prompting John Freehery, a Republican lobbyist and congressional aide to comment that although he doesn’t believe the field is weak, there isn’t a candidate that unifies the Republican establishment.
Congress is widening its probe into trades made by SAC Capital Advisors on the suspicion of trading on insider information. The Senate Judiciary committee is now investigating about 20 trades completed in the last 10 years including those involving shares of healthcare companies who’s shares often move on the outcome of clinical trials. SAC has over $14 billion in assets and is managed by Steven A. Cohen. The probe underscores the government’s increasingly tough stance on insider trading including prosecution of individual traders.
Hon Hai Precision Industry Co (OTC:HNHPF) closed all its workshops that handle polishing for electronic parts following a blast last which that killed three employees and injured an additional 15. Hon Hai is majority owner of Foxconn International Holdings (OTC:FXCNF). Foxconn is a large contract manufacturer based in China, producing and assembling components for major electronics companies including Apple (NASDAQ:AAPL) and Nokia Corp (NYSE:NOK). The workshop is expected to come back online after testing is completed. In the meantime, its closure will add further to Apple’s iPad2 shortage.
A tornado ripped through the city of Joplin in Missouri Sunday evening, killing at least 89 people and destroying 2000 buildings. The giant tornado cut a path a half mile wide and six miles long through the town’s center. About 20% to 30% of the city is estimated to have suffered damage. This year has seen a record number of tornados, with over 600 in April alone, surpassing the previous record of 267 in April 1974. The Joplin twister was one of 68 spotted in seven Midwest states during that weekend alone.
Microsoft’s (NASDAQ:MSFT) fortunes continue to decline. Its market cap has now been overtaken by industry titan, IBM (NYSE:IBM). This is the first time IBM has had a larger market cap than Microsoft since 1996. Microsoft was recently overtaken by Apple only last year. It now stands in third place with a valuation of $201.3 billion, IBM at $203.5 billion, and goliath Apple at $308.3 billion. Microsft’s shares have been stagnant for the last 10 years.
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