U.S. stocks dropped modestly Thursday, bouncing off early morning lows but the story of the day was Japan's Nikkei market which fell over 7%. However that only reduced its year to date gains from 50% to 40%; it was long overdue for some sort of correction. Globally weaker than expected Chinese purchasing managers data and reaction to Bernanke's comments yesterday weighed on stocks. In the U.S. economic data reported Thursday was generally benign:
- The Department of Labor reported that initial claims for unemployment benefitsfell to 340,000 last week, down from 363,000 the week before.
- New home sales rose 2.3% in April compared with the month prior.
Oil fell fractionally to $94.25, gold gained 1.8% to $1391.80, and silver added 0.2% to $22.51.
Britain, France, and Germany all fell 2.1%.
- Germany's Purchasing Managers index edged up in May to 49.9 from 49.2 the previous month. French PMI was unchanged in May at 44.3, far below the 50-point line dividing expansions in activity from contractions.
Japan sunk 7.3% while China dropped 1.2%.
- The preliminary HSBC China Manufacturing Purchasing Managers' Index unexpectedly fell to a seven-month low of 49.6 for May, compared with a final reading of 50.4 in April.
- The yield on the benchmark 10-year Japanese government bond climbed to 1.0% in morning trade, the highest since April 2012. It later dropped as the Bank of Japan moved into the market with bond purchases and other measures.