The markets saw a dramatic drop after Jobless Claims were released at 8:30am ET. The number, expected to be in the 475,000 range, came in at a stunning 500,000, up 12,000 from last week. The key here is the 500,000 level being hit once again. This conjures up memories of 2008 and early 2009. It creates that massive panic attack that this economy is headed into, or even in another recession now that the massive government stimulus has subsided.
The SPDR S&P 500 ETF (NYSE:SPY) had been hovering higher this morning, trading close to $110.00. After the Jobless Claims were released, it is now at $108.97. The dollar has suddenly gotten weak, going negative as a recession plagued economy probably means more spending, printing of money which equals dilution. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $23.85 after closing yesterday at $23.91. Oil had been higher, but with a slowing economy, demand for oil in theory will slow as well. Less people with jobs equals less driving and less consumption of oil. Oil is now slightly lower on the day. In response to the fear that has now laced the markets after the Jobless Claims number, the SPDR Gold Trust (ETF) (NYSE:GLD) is inching higher, as safety once a gain looks to be someplace to move towards.
Keep an eye on the markets today. While they are sharply lower, it is possible we see the light volume take over and the down day not be as ugly as it may have been. Normally, one might expect the DOW to drop over 100 on this, maybe even 200-300. While it is possible, options expiration and light August volume may help the bull case to keep the losses smaller.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
