Friday’s Market Recap: US Consumer Confidence Falls To Record Low

The stock market ends the week with virtually no loss for the first time in 5 weeks, but continues to fall as the Dow (^DJI) decreased  1.41%, and closed at 8,852. The S&P (^GSPC) fell 0.37%, while the Nasdaq composite (^IXIC)  dropped 0.62%. Stocks traded back and forth most of the day and experienced high volatility that investors consider to be normal in our current economic stage. The Dow traded in a 7% range, but managed to have ended lower partially because of the gloomy new home development report released earlier today. The housing starts report, which measures new construction of residential units, expected an estimated increase by $0.880 million, but experienced a less desired result and increased $0.817 million. This is an important indicator because of the enormous impact felt by the Multiplier Effect. Many investors see this piece of information with a broader sense of how the market is moving, and believe it forecasts a lot about appliance and other retail sales.

The other important piece of data released today, the Michigan Consumer Confidence report, also posted negative results. The consumer sentiment for October, predicted to be at 66.0, fell to 57.5, ringing in the worst monthly decline in the history of the survey since it was created in 1952. With confidence falling over 18%, the U.S. market can most certainly be assuming harder times might be in store.

Other markets around the world experienced the same up and down patterns seen by investors today. The Nikkei closed the up 2.78% on the last day of the worst week since the ‘87 crash. The Shanghai also ended in the green with gains of 1.08%. The Hang Seng index moved in the other direction and closed down 4.44%.

In Europe, the major indices raked in some gains to help recover some of what was lost in the major sell-off last week. The FTSE 100 (^FTSE) closed up 5.22%, the DAX (^GDAXI)  ended 3.43%, while the CAC-40 (^FCHI) was boosted 1.39%. Though Monday’s gains have mostly been wiped out, the FTSE still ended the week higher than last week’s historical free-fall.

Oil recovered later in the day and settled above $71 a barrel after OPEC prepares for an emergency meeting to discuss production cuts. OPEC nations are planning budget cuts of up to $15 billion in the expectation of an increasingly dismal global outlook. November crude contracts were up 2.86% today. Gold prices continued their fall again today and decreased 2.08% at the closing bell. Gold experienced its worst week in 20 years as it fell $80 (9%) over the past 5 days.

AIG (AIG) is trying to sell off some of their assets in an attempt to quickly repay the government’s high rate interest loan. Bank of America (BAC), Blackstone Group (BX) and JP Morgan (JPM) are assisting AIG in their divestiture process.

Disclosure: The fund the author is associated with holds a long position in JPM.

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