Signs of a weak holiday shopping season and apprehensions over
the central bank trimming its economic stimulus plan dragged
benchmarks into the red on Tuesday. Profit booking also turned
out to be a deterrent for the markets. The Dow and S&P 500
extended their losing streak into a third day. These losses come
after benchmarks recorded eight consecutive weeks of gains last
week. This could lead to their first weekly losses since October.
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Ahead of Wall Street
The Dow Jones Industrial Average (DJI) lost 0.6% to close the day
at 15914.62. The S&P 500 declined 0.3% to finish yesterday's
trading session at 1795.15. The tech-laden Nasdaq Composite Index
fell 0.2% to end at 4037.20. The fear-gauge CBOE Volatility Index
(VIX) rose 2.3% to settle at 14.55. Consolidated volumes on the
New York Stock Exchange, American Stock Exchange and Nasdaq were
roughly 5.7 billion shares. Declining stocks outnumbered the
advancers. For 60% shares that declined, only 38% advanced.
The retail sector was among the biggest losers of the day.
Amazon.com, Inc. (NASDAQ:
) was a big drag on the S&P 500 after its shares declined
nearly 2% to $384.66. Moreover, Yum! Brands, Inc. (NYSE:
) lost 2.7% after stating that its KFC restaurants in China
failed to post promising results.
On Monday, the National Retail Federation had reported that
retail sales were down 2.7% to $57.4 billion during the
Thanksgiving weekend. This occurred despite a 27% jump in
Thanksgiving shoppers. The report also stated that the average
spend of shoppers declined 6% to $407.02, largely due to lower
What affected the mood on Tuesday were doubts over how well the
holiday shopping season could turn out to be. Retail stocks were
sold heavily, pushing down the retail sector and the broader
markets. The SPDR S&P Retail (ETF) (NYSEARCA:
) lost 0.1%. Stocks such as PriceSmart, Inc. (NASDAQ:
), SUPERVALU INC. (NYSE:
), Delhaize Group (NYSE:
), Ingles Markets, Incorporated (NASDAQ:
), and Whole Foods Market, Inc. (NASDAQ:
) declined 1.2%, 0.9%, 1.3%, 0.7%, and 0.1%, respectively.
The Dow was also affected by declines in E I Du Pont De Nemours
And Co (NYSE:
) and Pfizer Inc. (NYSE:
), which dropped 2.0% and 1.9%, respectively.
Investors' speculation over the Federal Reserve's next expected
move related to the $85-billion bond buyback plan also dented
sentiment. Some market watchers believe that the Fed may taper
its stimulus program earlier than expected. These speculations
cropped up following encouraging manufacturing and construction
spending data published on Monday. Investors now eagerly await
the key non-farm payrolls report that is scheduled for release on
The President of the San Francisco Federal Reserve Bank, John
Williams said in an interview that the central bank should make
efforts to convince investors that interest rates are going to
stay low for a sufficiently long period even after the Fed ceases
its stimulus program. He added that the central bank should
provide an end date for the stimulus plan and a purchase total
once it is sure about the economy's strength.
Williams said: "My view would be that we would not be raising the
funds rate even if the unemployment rate was below 6.5 percent as
long as inflation continued to be low, for some time". He added:
"We need to be communicating more about the post-6.5-percent
world now, because it could be with us much sooner than we
expect, and I don't want market participants to be surprised."
"We could be a little more concrete about what we are going to be
looking for liftoff," he said.
The utilities sector was the biggest gainer among the S&P 500
industry groups on Tuesday. The utilities SPDR (XLU) gained 0.5%.
Stocks such as Duke Energy Corp (NYSE:
), Dominion Resources, Inc. (NYSE:
), NextEra Energy, Inc. (NYSE:
), The Southern Company (NYSE:
), and Exelon Corporation (NYSE:
) increased 0.2%, 0.8%, 0.1%, 0.3%, and 1.9%, respectively.
The materials sector was the biggest loser among the S&P 500
industry groups on Tuesday. The Materials SPDR (XLB) lost 1.2%.
Stocks such as Monsanto Company (NYSE:
), The Dow Chemical Company (NYSE:
), Praxair, Inc. (NYSE:
), and Freeport-McMoRan Copper & Gold Inc. (NYSE:
) decreased 1.5%, 3.2%, 0.4%, and 0.1%, respectively.