Wall Street Is Mixed

Stocks turned lower on Friday afternoon as the initial bounce from a two-day sell-off faded and banking stocks fell, while a sharp drop in Oracle shares dragged down the Nasdaq.

Oracle dropped 7.9 percent a day after the tech giant missed expectations for software sales and subscriptions for a second straight quarter.

Large bank shares were hit hard as the sell-off in Treasuries continued, on fears of sharp write downs linked to their bond holdings. Citigroup dropped 4 percent to $45.97 and Morgan Stanley lost 3.1 percent to $24.37.

in afternoon trading the Dow Jones industrial average was down 0.2 percent, the Standard Poor’s 500 fell 0.4 percent and the Nasdaq Composite was 0.8 percent lower.

Benchmark 10-year Treasury notes were down 16/32 in price to yield 2.4807 percent, while 30-year bonds dropped 15/32 in price to yield 3.544 percent.

Share prices had slumped since Wednesday, when Federal Reserve chairman, Ben S. Bernanke, laid out the Fed’s plans to pull back on its $85 billion in monthly asset purchases.

Volatility, which has spiked since May 22 when Mr. Bernanke first hinted that the Fed might begin to rein in its stimulus measures, is expected to continue. The C.B.O.E. Volatility Index, a gauge of anxiety on Wall Street, jumped 23 percent on Thursday to 20.49 points, the first time this year it closed above 20.

“While volatility is going to remain high, the market next week will move to a consolidation phase,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. He said the S. P. would “bounce around” 1,575 to 1,600 points “as a recovery stage begins to take hold.”

Mr. Cardillo pointed to the quarterly expiration and settlement of June equity options and futures contracts on Friday as another volatility trigger for the trading session. About $14 billion is expected to change hands in index rebalancing-related trading toward the session’s close, according to Credit Suisse, which could further add to volatility.

Global stock markets, bonds and commodities recovered some lost ground on Friday. Easing fears about an immediate banking crunch in China also made for a calmer tone, although short-term funding rates there remain elevated, especially for smaller banks. Japan’s Nikkei closed 1.7 percent higher, while the Shanghai composite was 0.5 percent lower. The FTSEurofirst 300 index of leading European shares was trading lower, down 0.51 percent, at 1,1388.11.

Facebook shares rose 1.3 percent in early trading. UBS raised its rating on the stock to buy from neutral.

China’s central bank faced down the country’s cash-hungry banks on Friday, letting interest rates spike as it increased pressure on banks to curb rampant informal lending and speculative trading. Some worry that its approach could backfire, creating the potential for defaults and gridlock in the money markets of the world’s second-largest economy.

The dollar stepped back from a two-week high against a basket of currencies but was seen on a solid footing given the Fed’s plans and could see its best weekly rise in a year. It gained 0.5 percent against the yen to 97.75 yen in choppy trade.

The euro slumped 0.5 percent to $1.3154, backtracking from Wednesday’s four-month peak of $1.3414.

Article source: http://www.nytimes.com/2013/06/22/business/daily-stock-market-activity.html?partner=rss&emc=rss