Markets ended in the red and the S&P fell below the record
2k mark as concerns about Russia-Ukraine tension overshadowed
encouraging U.S. economic data. Dismal inflation rate data from
Eurozone also dragged down the benchmarks.
For a look at the issues currently facing the markets, make sure to
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) declined 0.3% to close at
17,079.57. The Standard & Poor 500 (S&P 500) decreased 0.2%
to close at 1,996.74. The tech-laden Nasdaq Composite Index closed
at 4,557.69; declining 0.3%. The fear-gauge CBOE Volatility Index
(VIX) rose 2.3% to settle at 12.05. A total of 2.3 billion shares
were traded in the NYSE on Thursday. Decliners outpaced advancing
stocks on the NYSE. For 55% stocks that declined, 41% advanced.
On Thursday, Ukrainian President Petro Poroshenko accused Russia of
sending troops into Ukraine in order to support the pro-Russian
separatists in the eastern region. He said the situation is
"rapidly deteriorating" as "Russian troops have actually been
brought into Ukraine." It was reported that the separatists have
captured the town of Novoazovsk. Following such news, Ukrainian
President reacted immediately and said conditions were
"extraordinarily difficult...but controllable". The U.S. and the
European Union decided to strengthen their sanctions further
against Russia following this development.
However, Moscow denied the accusation of sending troops and
reportedly said: "The information contained in this material bears
no relation to reality."
Discouraging inflation data from the Eurozone also dented investor
sentiment. Germany posted higher-than-expected unemployment rate in
August with a dismal inflation rate of 0.8%. On the other hand,
Spain saw annual deflation rate of 0.5% in August. Moreover,
Belgium's inflation rate reached 0.02%, the lowest level in about 5
years. Additionally, Eurozone's inflation rate is expected to
decline from 0.4% in July to almost 0.3% in August, much behind the
ECB's target of 2%.
Separately, the U.S. Department of Commerce reported Q2 GDP second
estimate of 4.2%. This was higher than the consensus estimate of
3.9%, indicating an economic recovery.
The US Department of Labor reported initial claims declined to
298,000 for the week ending Aug 23 from 299,000 in the prior week.
This was below consensus estimate of 301,000. Pending home sales
number also came in positive. National Association of Realtors
(NAR) reported sales rose 3.3% in July, easily beating consensus
estimate of a 0.5% hike. However, these encouraging economic
reports failed to lift the markets.
Shares of Abercrombie & Fitch Co. (
) declined 4.8% after posting second quarter net sales of $890.6
million, declining 6% year over year. Moreover, quarterly revenues
fell short of the Zacks Consensus Estimate of $917 million.
Williams-Sonoma Inc. (
) forecasted third quarter earnings per share between 58 cents to
63 cents, missing the Zacks Consensus estimate of 65 cents. Shares
of Williams-Sonoma plunged 12% yesterday following weak guidance.
However, Signet Jewelers Limited's (
) shares jumped 7.7% after reporting second quarter organic
earnings per share of $1, rising 19% year on year.
The SPDR S&P Homebuilders (XHB) was the biggest loser among the
S&P 500 sectors. The sector declined 0.9% yesterday. Key
housing stocks from the sector such as PulteGroup, Inc. (
), KB Home (
), DR Horton Inc. (
) and Beazer Homes USA Inc. (
) rose 0.4%, 0.3%, 0.2% and 1%, respectively. Out of 10 S&P
sectors, 6 sectors declined on Thursday.
Volumes were unexpectedly low during this week as some of the
investors are in holiday mood ahead of the Labor Day. Markets will
remain closed on Monday for Labor Day holiday.
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