Markets lost out on their initial gains and the S&P 500
dropped from its four-year high as investors chose to book profits
on Tuesday. Markets had rallied in the first hour lifted by hopes
of the ECB plunging into action to buy back Italian and Spanish
bonds. However, investors hurried to encash the uptrend and booked
their profits. Eventually, markets ended in the red. Also, tech
bellwether Apple closed lower a day after it became the world's
most valuable company ever.
The Dow Jones Industrial Average (DJI) dropped 0.5% and closed
at 13,203.58. The Standard & Poor 500 (S&P 500) lost 0.4%
and finished yesterday's trading session at 1,413.17. The
tech-laden Nasdaq Composite Index ended at 3,067.26, dropping 0.3%.
The fear-gauge CBOE Volatility Index (VIX) gained 7.1% and settled
at 15.02. The VIX has now rebounded from its five-year low that it
achieved last week. The Street continued with its low volumes and
total volumes on the New York Stock Exchange was 3.29 billion
shares. Decliners outpaced the advancing stocks on the NYSE; as for
53% stocks that declined, 42% stocks closed in the green.
Investors were buoyed by the fact that markets were trending
higher in the first hour of trading. The Dow had risen as much as
59 points, before it lost steam. More importantly, the S&P 500
had hit an intra-day high of 1,426.68, the highest level since May
2008. However, investors' decision to book profits reversed the
markets' uptrend, which in turn was boosted by hopes of the
European Central Bank was Staking steps to buy back the bonds of
Investors gained confidence following media reports that the ECB
was taking concrete steps towards Italian and Spanish bond
purchases. The news sparked off a rally in the European markets and
the ripple effect spread to the US, at least till the end of the
first hour. Over the past few days, investors have been puzzled
over whether the ECB intends to go ahead with its decision on bond
purchases. Last week, German Chancellor Angela Merkel said all
efforts would be taken to help the European Central Bank tackle the
region's debt crisis. Merkel had said: "We feel committed to do
everything we can in order to maintain the common currency".
However, this was followed by a contradictory view by Bundesbank,
which opposed European Central Bank's (ECB) idea of bond purchases.
However, recently Germany's central bank noted: "The Bundesbank
remains critical of the purchase of euro system sovereign bonds,
which comes with considerable risks for stability".
Coming back to yesterday's developments, Apple Inc. (NASDAQ:
) dropped 1.4% yesterday to settle at $656.06 a share. The drop in
Apple shares comes after just after a day when with a market value
of $623 billion, the iPhone and iPad maker broke an earlier record
set by Microsoft Corporation (NASDAQ:
) to become the world's most valuable company ever. The technology
sector as a whole also suffered yesterday and was one of the
biggest laggards among the 10 S&P 500 industry groups.
Technology Select Sector SPDR (XLK) was down 0.7%. Among the
stocks, Google Inc (NASDAQ:
), International Business Machines Corp. (NYSE:
), Hewlett-Packard Company (NYSE:
), Dell Inc. (NASDAQ:
), Juniper Networks, Inc. (NYSE:
) and Ciena Corporation (NASDAQ:
) dropped 0.9%, 0.9%, 0.8%, 1.8%, 0.7% and 0.3%, respectively.
While most of the sectors ended in the red, the financial sector
was lucky to finish in the green. Financial Select Sector SPDR
(XLF) added 0.3% and stocks including JPMorgan Chase & Co.
), Citigroup Inc. (NYSE:
), Morgan Stanley (NYSE:
), UBS AG (USA) (NYSE:
) and Deutsche Bank AG (USA) (NYSE:
) jumped 1.8%, 2.5%, 0.4%, 2.7% and 4.2%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
(CIENJPM): ETF Research Reports
DEUTSCHE BK AG (DB): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
HEWLETT PACKARD (HPQ): Free Stock Analysis
INTL BUS MACH (IBM): Free Stock Analysis Report
JUNIPER NETWRKS (JNPR): Free Stock Analysis
MORGAN STANLEY (MS): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis
UBS AG (UBS): Free Stock Analysis Report
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