LONDON (ShareCast) - -Markets mull Fed minutes
-Spain bond auction highlights fragility in Europe

Dow Jones: -0.95%
S & P 500: -1.02%
NASDAQ: -1.46%

The main Wall Street indices all ended lower as markets continued to mull the Fed’s reluctance to inject more stimulus into the US economy. The dark storm clouds hanging over Spain also seemed to make investors cautious.

The minutes of the last meeting of the Federal Open Markets Committee released yesterday showed only a dwindling minority of members were minded to print more money and buy government debt, in the process known as quantitative easing.

Meanwhile, an auction of Spanish government bonds this morning didn’t go according to plan. The country issued €2.59bn in short to medium-term debt, but the target range had been between €2.5 and €3.5bn. In other words, investors weren’t very keen to buy.

Recent news on Spain has been grim, with the new government coming under pressure from its Eurozone peers to revise down its budget deficit target for 2012 even as unemployment rises.

Figures released yesterday revealed that Spanish unemployment had risen by nearly 40,000 to hit 4.75m people or 23.6% of the workforce. Over half of young people in Spain do not have a job.

Why does this matter to the US? Because it shows just how fragile the situation is in Europe, and if the Eurozone is plunged back into chaos, then America’s nascent recovery could be choked off

ECONOMY

The Institute for Supply Management’s services index for March dropped to 56.0 from 57.3 in February and below the consensus forecast of 57.0 .

ADP’s March employment report showed the US economy created 209,000 jobs, above the consensus forecast of 200,000.

COMPANIES

Analysts at Bank of America have lowered their rating on IBM (-1.6%) to neutral from buy.

The credit ratings agency, Moody's, has cut its rating for General Electric (-1%) by one notch to Aa3.

Bernstein has raised its rating on American International Group (+5%) to overweight from hold, and the price target to $45 from $29.

Yahoo (+0.5%) has announced the layoff of 2,000 employees, 14% of its workforce, to save $375 million annually.

SECTORS

The biggest gains were made in Insurance (+1.8%) and Railways (+0.6%).

The largest losses were in Gold Mining (-3.9%) and Precious Metals (-3.6%).

OTHER MARKETS

Futures contracts on a barrel of West Texas crude fell 1.97%, to $102.65, on the Nymex.

10 year treasury bonds rose 20/$32 for a yield of 2.237%.

At the close the euro was down 0.71%, to $1.3139.

BS

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