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Massive Selling Hits Wall Street

U.S. equity markets were besieged by sellers today as concerns about the state of the global economic recovery and sovereign debt problems in Europe continue to weigh heavily on stocks. Making matters worse were bearish reports from The Conference Board on Chinese growth and U.S. consumer confidence.

According to Reuters, The Conference Board on Tuesday corrected its leading economic index for China to a 0.3 percent gain in April rather than the 1.7 percent rise the group earlier reported.

The Conference Board’s U.S. consumer confidence index fell from a revised 62.7 in May to 52.9 in June. Consensus estimates were that the index would only fall very slightly to 62.0.

The Dow Jones Industrial Average fell 268 points to close below the 10,000 level at 9,870. The Dow traded in a range between 9,812 and 10,202. Year-to-date, the widely watched blue chip stock index has lost 5.35%.

The SPDR S&P 500 ETF (NYSE: SPY) lost 3.09% to $104.21 on Tuesday. Ominously, SPY volume was very heavy, with over 360 million shares trading hands compared to a daily average of just 262 million. Once again, volume has been heavy on down days, and light on up days – not a good sign.

Gold moved marginally higher, as the fear trade was back on across Wall Street. COMEX gold futures gained $1.80 to $1,240.40 an ounce. The SPDR Gold Trust ETF (NYSE: GLD) added 0.15% to $121.27. All-time highs were breached on an intra-day basis in the GLD yesterday, before prices pulled back. Look for a re-test soon.

The rally in Treasuries continued in a major way during Tuesday’s session. The iShares Lehman 20+ Year Treasury Bond ETF (NYSE: TLT) jumped 1.09% to $101.07. Treasury notes with a 10-year maturity are now yielding an ultra-low 2.9545%.

Keep a very close eye on the bond market to gauge the near term direction for stocks, as the continued push into Treasuries is suggesting investors are frantically reducing risk exposure.

The U.S. Dollar was higher today, as money flowed into dollars and away from currencies which are perceived to entail more risk. The PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the dollar versus a basket of foreign currencies rose 0.48% to $25.08. The closely watched EUR/USD pair is now trading at $1.2188.

Tesla Motors (NASDAQ: TSLA) began trading on the Nasdaq exchange today after the company’s IPO raised over $220 million. Tesla is a Silicon Valley electric car maker. The shares surged an incredible 40.53% to close at $23.99. The deal had been priced at $17 which was above the expected range of $14-$16. The size of the offering was also expanded by 20% on Monday due to strong demand.


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