Wall Street Wrap for 11 August 2010

Wall Street Wrap for 11 August 2010

New York: US markets were in the negative on Wednesday with the Dow Jones, the S&P 500 and the Nasdaq all ending down between 2.5% and 3%.

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Reports showed the US trade deficit widened, raising concerns that the economic recovery could be losing steam. The trade gap grew to 19%. Imports rose 3%, driven mostly by US demand for foreign made consumer goods like iPads and flat screen TVs. Exports fell 1.3% as American producers sent fewer goods abroad.

A number of reports from China showed a grimmer July. Industrial production slowed to its lowest level this year, retail sales eased, and inflation rates spiked up in the month.

In corporate news, AIG announced it would sell most of its consumer finance unit to investment manager Fortress, which should enable the company to raise cash as it needs to pay the US government for its 2008 bailout. AIG shares dropped almost 6% for the day.

Toyota said there are no further problems regarding its cars beyond those the company has already recalled. An independent investigation looked into 58 crashes and didn’t find any further safety defects. Still shares fell almost 3%.

In real estate, a report showed the median price of homes in the US rose 1.5% in Q2.

In world markets, major European indices ended the day down over 2%. Asian markets ended mixed. Japan’s Nikkei fell after disappointing manufacturing numbers came in.

In commodities oil fell $1.76 to $78.49 a barrel and gold was down $2.50 to $1,200.50 an ounce.

In bonds, the yield on the 10-year treasury was down to 2.7% from 2.77% on Tuesday.

Demand for the government’s 10-year note auction came in strong, with bids totaling nearly $73 billion in response to its sale of $24 billion worth of bonds.