The U.S. stock market fell on Wednesday for the third straight
session as investors continued to mull the timeline for the
Federal Reserve to ratchet down its stimulus programs. The
multi-year rally in risk assets has been driven in large part by
huge liquidity injections from the Fed and other central banks,
and investors worry about economic growth in the absence of these
Given the run-up in the major averages in 2013, the markets
are also vulnerable to profit taking bouts in the absence of good
news. Sentiment has been turning bearish in recent days, and a
triple digit decline on Wednesday saw the Dow close below
The Dow Jones Industrial Average fell 127 points, or 0.84
percent, to 14,995.
The S&P 500 lost almost 14 points, or 0.84 percent, to
just below 1,613.
The Nasdaq fell nearly 37 points, or 1.06 percent, to close at
For the month of May, the Treasury Budget showed a deficit of
$138.7 billion. This compared to a deficit of $124.6 billion in
May 2012. The bottom line figure was slightly below expectations
calling for a deficit of $139.0 billion last month.
Despite a weak stock market, energy prices rose on Wednesday.
Near the close of equities, NYMEX crude futures were up around
0.50 percent to $95.85. Brent contracts were last higher by 0.53
percent to $103.51. Natural gas futures rose around 1.30 percent
on the session to $3.77.
Precious metals also got a slight boost on the day. At last
check, COMEX gold futures had risen 0.72 percent to $1,386.90
while silver was up 0.23 percent to $21.70. Copper futures added
0.80 percent on Wednesday to $3.2205.
In the grains complex, both corn and wheat lost ground.
Heading into the closing bell, corn futures were down 2.41
percent while wheat had lost roughly 2 percent. Movers in soft
commodities included coffee and cotton. Coffee futures lost
nearly 4 percent on the session while cotton was last up 3.39
In an unusual twist, bonds recorded steep losses along with
stocks on Wednesday. At last check, the iShares Barclays 20+ Year
Treasury Bond ETF (NYSE:
) was down 1.40 percent to $112.36. Yields surged as bond prices
At last check, the yield on the 2-Year Note was 0.32 percent
and the 5-Year Note was yielding 1.14 percent. Yields on the
10-Year Note and 30-Year Bond were 2.23 percent and 3.37 percent,
The U.S. Dollar was slightly lower on the session. Nearing the
close of equities, the PowerShares DB US Dollar Index Bullish ETF
), which tracks the performance of the greenback versus a basket
of foreign currencies, was down 0.09 percent to $21.96.
The closely watched EUR/USD pair was last trading up 0.17
percent to $1.3329. Overall, volatility was limited in currency
markets, but other movers included the USD/JPY, which lost 0.26
percent, and the AUD/USD, which rose 0.48 percent.
Volatility and Volume
A third straight day of declines for the major averages
triggered a jump in the CBOE Volatility Index on Wednesday. In
late afternoon trade the VIX was up almost 9 percent to 18.59 and
is now sitting at the high-end of its recent range.
As nervousness become more palatable on Wall Street, trading
volumes have been rising in recent weeks. On Wednesday, around
165 million SPDR S&P 500 ETF (NYSE:
) shares traded hands compared to a 3-month daily average of 132
Cooper Tire & Rubber Company (NYSE:
) surged almost 41 percent after the company agreed to be
acquired by Apollo Tyres in an all-cash deal valued at around
Health Management Associates (NYSE:
) was trading up better than 11 percent on Wednesday afternoon.
The move comes in the wake of a request from the company's
largest shareholder, hedge fund Glenview Capital Management LLC,
that it remove its poison pill provision or raise the trigger to
25 percent from 15 percent. Glenview said that it is evaluating a
number of options with regard to its HMA investment and may try
to change all or part of the company's board. Deustche Bank
analysts said that Glenview may attempt to force a sale of the
company and upgraded the stock to Buy.
Software maker Agilysys (NASDAQ:
) climbed 9 percent on the session after the company reported
better than expected fiscal Q4 results.
Rambus added more than 6 percent after South Korea's SH Hynix
Inc. agreed to pay $240 million as part of a patent dispute
dating all the way back to 2000.
Ulta Salon (NASDAQ:
) soared almost 15 percent after reporting its fiscal
first-quarter earnings results. Profit in the quarter was up 20
Spectra Energy (NYSE:
) rose roughly 11 percent after announcing it will drop-down its
remaining domestic transmission and storage assets to Spectra
Energy Partners (NYSE:
) by the end of the year. In light of the news, Deutsche Bank
upgraded the stock to Buy.
Boston Beer (NYSE:
) rose better than 5 percent after getting an upgrade from Sell
to Neutral at Goldman Sachs. The firm also lifted its price
target on the stock by $21 to $162.
Investor Carl Icahn's holding company Icahn Enterprises (NYSE:
) lost almost 10 percent on the session after pricing a
depositary unit offering.
Manchester United (NYSE:
) lost more than 9 percent on Wednesday after reaching a deal to
sign Argentinian defender Ezequiel Garay for $26.6 million.
Take-Two Interactive Software (NASDAQ:
) fell almost 9 percent after the company announced a proposed
First Solar (NASDAQ:
) lost almost 11 percent after disclosing that it intends to sell
8.5 million shares.
Biogen Idec (NASDAQ:
) fell more than 7 percent after the stock was downgraded at
Citigroup from Buy to Neutral.
) continued to plummet on Wednesday after the company announced
the impending departure of CEO Christine Day on Monday after the
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