FKLI Related News (Fri, June 21)

Stocks crumpled Thursday, with the Dow shedding more than 350 points, under the weight of worries that the Federal Reserve would throttle back on easy money policies that have helped fuel the recovery. Concerns about China’s economy added fuel to the selling, which began in the U.S. Wednesday and spread swiftly around the globe to come full circle back to U.S. markets Thursday. It was a day of superlatives: the U.S. markets’ worst day so far this year and the biggest percentage drop – at 2.34 percent - for the Dow since Nov. 7, 2012, the day after President Obama was reelected.

The Dow Jones Industrial Average plummeted 353.87 points, or 2.34 percent, to 14,758.32. The broader S&P 500 Index fell 40.74 points, or 2.50 percent, to 1,588.19. The tech-heavy NASDAQ dropped 78.57 points, or 2.28 percent, to 3,364.63. The Dow sell-off alone had wiped out more than $120 billion of investors' capital since Fed Chairman Ben Bernanke's comments on Wednesday afternoon. In the last two days, the Dow and the S&P 500 have lost all of their gains for May and June combined.

Despite positive news on the U.S. housing front, higher than expected U.S. jobless numbers added to the gloomy atmosphere on the markets and benchmark Treasury yields were near their highest in almost two years. "Despite the sell-off yesterday, you saw the cyclical names holding on that's considered important because it's more indicative of the underlying strength of the economy," noted Quincy Krosby, market strategist at Prudential Financial. "We shouldn't be surprised by what the Fed said yesterday—Bernanke had already mentioned this in his speech back in May and we saw an immediate reaction in the bond market," said Krosby. "We haven't had a meaningful correction in the market and if this selloff continues…it doesn't mean the market is going to collapse; it is essentially recalibrating—the road to normal is going to be filled with detours."

European shares closed deeply in the red across the board with the FTSEurofirst 300 index falling nearly 3 percent. Markets in Asia were slammed, with the Japanese Nikkei closing down nearly 2 percent. South Korea's Kospi and the Shanghai Composite traded near 2013 lows. Adding to woes in Asia, China's HSBC Flash Purchasing Manager's Index, a preliminary reading of manufacturing activity, fell to a nine-month low in June.


FKLI spot month contract opened lower at 1,733 this morning following Dow’s big drop. Today’s Support and Resistance for June contract is located around 1730 and 1750 respectively.