Stock Market News for April 5, 2012 - Market News

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A poor showing at Spain bond sales meant European economic jitters returned to haunt investors on Wednesday. Subsequently, benchmarks suffered their worst loses in nearly a month. Additionally, concerns from the Fed minutes remained an overhang even yesterday as investors' hopes for fresh economic stimulus were dashed once again.

The Dow Jones Industrial Average (DJI) plunged 124.80 points or 1% to settle at 13,074.75. The Standard & Poor 500 (S&P 500) dropped below the key 1,400 mark, after losing 1.0% to finish yesterday's trading session at 1,398.96. The tech-laden Nasdaq Composite Index declined 1.5% and closed at 3,068.09. The fear-gauge CBOE Volatility Index (VIX) jumped almost 5.0% to settle at 16.44. Consolidated volumes on the New York Stock Exchange, the American Stock Exchange and Nasdaq were 6.82 billion shares, significantly lower than last year's daily average of 7.84 billion. Decliners outpaced advancing stock on the NYSE; as for 79% of the declining stocks, only 19% ended higher. The remaining 2% stocks were left unchanged.

Benchmarks had rebounded from their lows yesterday, but still ended up putting in one of their weakest performances in almost a month. European concerns merged with the lingering domestic woes and no catalyst was strong enough to prevent the Dow's triple-digit plunge. It was only the second time this year that the Dow dropped by three digits. Additionally, only four among the 30 Dow components managed to finish in the green, but none of them could manage a gain over 0.5%. Coming to the leading decliners in the Dow, Alcoa, Inc. (NYSE: AA ), Bank of America Corporation (NYSE: BAC ), Cisco Systems, Inc. (NASDAQ: CSCO ), E. I. du Pont de Nemours and Company (NYSE: DD ), JPMorgan Chase & Co. (NYSE: JPM ) and Microsoft Corporation (NASDAQ: MSFT ) plunged by 2.5%, 3.1%, 2.2%, 1.3%, 2.2% and 2.3%, respectively.

European nations including Ireland, Portugal, Greece and Italy had to deal with surging borrowing costs not too long ago. Investors had witnessed the consequences of surging borrowing costs and every time something similar occurs, investors' outlook about economic conditions takes a beating. Yesterday, Spain's yield on 10-year bonds jumped from 5.45%. to 5.71%, the highest since January this year. Inflated bond prices dragged the benchmarks down yesterday, as investors fretted over the health of the European economy. The rise in Spain's bond yield was far from the 'unsustainable' 7% mark, but was enough to spark off widespread concerns.

While investors' apprehension over the continent's economic health increased, they also found it difficult to come to terms with an economy with no monetary stimulus plan, at least for now. These concerns overshadowed a positive report from payroll processor Automatic Data Processing, Inc. (NASDAQ: ADP ). The ADP National Employment Report noted that private-sector added 209, 000 jobs from February to March on a seasonally adjusted basis. Job additions were in line with estimates and the report also suggested broad-based gains. According to the report: "Employment in the private, service-providing sector increased 164,000 in March, after rising a revised 183,000 in February. Employment in the private, goods-producing sector rose 45,000 in March. Manufacturing employment increased 23,000, while construction employment advanced 13,000 and the financial services sector added 8,000 jobs during that period".

Separately, the Institute for Supply Management's services-sector index reflected growth in the economy and somewhat limited the day's losses. The report noted: "The NMI registered 56 percent in March, 1.3 percentage points lower than the 57.3 percent registered in February, and indicating continued growth at a slower rate in the non-manufacturing sector. The Non-Manufacturing Business Activity Index registered 58.9 percent, which is 3.7 percentage points lower than the 62.6 percent reported in February, reflecting growth for the 32nd consecutive month".


 
ALCOA INC ( AA ): Free Stock Analysis Report
 
BANK OF AMER CP ( BAC ): Free Stock Analysis Report
 
CISCO SYSTEMS ( CSCO ): Free Stock Analysis Report
 
DU PONT ( EI ) DE ( DD ): Free Stock Analysis Report
 
JPMORGAN CHASE (JPM): Free Stock Analysis Report
 
MICROSOFT CORP (MSFT): Free Stock Analysis Report
 
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This article appears in: Investing , US Markets

Referenced Stocks: AA , BAC , CSCO , DD , EI

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