6/21/12 4:30 PM – Down Day in Stocks

The U.S. stock market as measured by the S&P 500 index lost 2.23% today which is really just a give-back of the runup on Tuesday in anticipation of the Fed meeting which yielded nothing of substance. That is a pretty normal pattern for trading around a Federal Reserve meeting. Europe was down less than 1% but of course closed at 11 AM EDT. Asia was down over 1% on average. Gold lost abou 2.5% today while natural gas gained over 2%. I reference natgas because most of my clients have a position in it. Bonds were up slightly.

All S&P sectors were down today. Banks were hit as Moody’s ratings service is expected to downgrade the credit rating of at least 15 major bank stocks after the close of trading today. Even though most U.S. banks don’t have a lot of exposure to European sovereign debt they say, that may be because much of their exposure has been hedged rather than sold and sometimes hedges don’t work as expected, the primary example being 2008.

Part of the difficulty facing the market is the notion that Germany, the only really sizeable strong economy in Europe is slowing down and may not be far from going into recession itself. One thing you don’t want is to have your lone ongoing financier having difficulties and that is basically the role that Germany plays in the Eurozone these days.