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Reports US

US stock market daily report (January 24, 2014, Friday)

January 27, 2014, Monday, 05:12 GMT | 00:12 EST | 09:42 IST | 12:12 SGT
Contributed by Millennium Traders

Dow Jones Industrial Average ended the trading session on Friday, lower by over 318 points, amidst a heavy selloff of U.S. stocks. The DOW hasn't seen a loss this heavy since June. NASDAQ closed the session lower by over 90 points and S&P 500 gave up over 38 points. The overall negative market action throughout the past holiday shortened trading week reflects the markets reaction to negative news on weak manufacturing data from China. Concerns are rising worldwide over the world’s second-largest economy and the ability of global central banks to keep markets afloat. On top of the news for China, stocks have been reaching further highs, a sign that profit taking is in order. Additionally, a sizable short squeeze is in order for U.S. markets.

The CBOE Volatility Index [VIX] or fear index, surged 25% Friday for the biggest one-day percentage rise since the Boston Marathon bombing. The VIX is up 41% for the week, representing its largest weekly gain since the week ending July 29, 2011. 

As investors fears rise, so do treasury prices. The 10-year note yield, which falls as prices rise, was down 4.5 basis points at 2.728%. The benchmark note yield, which fell 9 basis points for the week, has fallen over a quarter of a percentage point since the beginning of 2014. The 30-year bond yield fell 4 basis points to 3.644% while the 5-year note yield fell 3.5 basis points to 1.556%.

Investors are once again focused on the national debt ceiling. In a letter dated January 22, U.S. Treasury Secretary Jacob Lew urged lawmakers to raise the borrowing limit as soon as possible. In his letter to congressional leaders, he addressed so-called extraordinary measures to keep the government from hitting the debt ceiling would be exhausted by the end of February. If a breach of the debt limit prohibits the U.S. from borrowing, it would have to eventually delay payments on maturing T-bills. 

Natural-gas futures rallied on Friday as forecasts for extreme cold fed demand and the potential supply declines. February natural gas added 45 cents or 9.6%, for the session to settle at $5.182 per million British thermal units. Nat-gas futures posted the highest close for a most-active contract since June 2010 with prices ending the week 20% higher than previous week's close.