The markets finally took a long deserved breather today, but not before rallying near the closing bell to cut the days losses in half.  The Dow Jones Industrial average was down 65.63 to 8,675.24 for a loss of 0.75% on the day.  The Nasdaq Composite and Standard and Poor’s 500 lost 10.88 and 12.98 respectively to close at levels of 1,825.92 and 931.76 representing losses of 0.59% and 1.37%.  The broader U.S. equity market had turned in five straight days in the green and many market participants saw this one coming.

The biggest piece of news for the day came from the Federal Reserve’s Chairman Ben Bernanke and his comments regarding the monetary policy, fiscal policy, and national debt levels.  Bernanke gave a speech to the House Budget Committee and urged them to take responsibility when it comes to the handling of the countries finances.  He says that using the Obama administrations estimates of a 2009 deficit of $1.8T, an all time record quadrupling that of the previous record set in 2008, and a 2010 deficit of $900B the national debt to Gross Domestic Product ratio will rise to 70%, or the highest levels since the end of the Second World War.  He cited that Medicare Programs at its current pace will be bankrupt by 2017 and Social Security Programs will be bankrupt by 2037 unless drastic changes are made.  These numbers are down from last year’s estimates and Bernanke mentioned that it is possible that they could be revised downward in the future.  The Obama administration had no immediate comment regarding Bernanke’s testimony.

The markets suffered their loses due to a slew of worse than expected economic data that was released today, particularly within the energy and industrial sectors.  Crude oil storage inventories rose by 2.9M barrels this week after dropping 5.4M barrels last week, bringing inventories back towards their 16 year highs of close to 400M barrels of storage on the mainland.  This does not include the roughly 140M barrels that are out at sea sitting in oil tankers.  Oil dropped over 6% on the news to close the day at $66.12 on the NYMEX.  This adversely affected natural gas before their inventory reports tomorrow at 10:30 AM as the commodity dropped over 11% today to $3.77 per Mcfe (thousand cubic feet equivalent).  Energy equities, now the third largest sector in the S&P 500, suffered horribly as the S&P 500 Energy Composite dropped close to 3.5% on the day [[^GSPE]] helping to drag down the three major U.S. indicies.

In other news General Motors announce today that they were considering shutting down or idling even more than the original 12 plants that they had listed.  After filing for bankruptcy protection on Monday, the American auto giant plans to re-emerge within 90 days a “leaner and meaner” competitor.

Please join us again today for the Daily Market Recap at Bullish Bankers.

- Charles Petredis

Disclosure: None.

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