Stock Market News for February 13, 2012 - Market News

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Benchmarks suffered their worst day of the year so far as Greece encountered another roadblock in its way to secure the next tranche of its bailout package. Investor sentiment was rattled following this development as markets were waiting anxiously for the final outcome of Greece's lingering debt problem. Investors' fear was completely reflected by the CBOE Volatility Index which shot up 11% on Friday.

The Dow Jones Industrial Average (DJI) dropped 0.7% to finish at 12,801.23. The Standard & Poor 500 (S&P 500) lost 0.7% and signed off yesterday's trading session at 1,342.64. The tech-laden Nasdaq Composite Index lost 0.8% and finally settled at 2,903.88. As investor apprehension grew over the debt crisis in Greece, the fear-gauge CBOE Volatility Index (VIX) jumped 11.6% to 20.79. It was the VIX's biggest jump in three months and the index moved above 20 for the first time in two weeks. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were 6.67 billion shares, lower than last year's daily average of 7.84 billion. Advancers were outnumbered by the declining stocks, as for three stocks that declined on the NYSE, only one managed to climb up.

Cross-Atlantic developments have mostly guided the markets throughout last week. On last Monday, news from the other side of the Atlantic was far from favorable. European leaders, including the French and German leaders had asked Greece to adopt new austerity measures in order to receive the next installment of the bailout package. Throughout last week, the odds of Greece securing the monetary aid continued to improve. However, Friday's developments negated the entire week's positives. It was like going back to square one, when euro-zone ministers said they require additional spending cuts. Friday's losses dragged the markets to the red zone for the week with the Dow, S&P 500 and Nasdaq dropping 0.5%, 0.2% and 0.1%, respectively.

Even after Greek political leaders agreed to the pain-stricken austerity measures so that it could receive the next installment of the bailout package, the situation worsened. Euro-zone leaders want additional €325 million or $430 million cuts to the year's budget in and over the already agreed €3.3 billion package. Also, international lenders want the austerity measures to be passed by the Greek Parliament and they need a written guarantee of the implementation of the cuts after the general elections in April.

German Chancellor Angela Merkel had said: "Time is running out". Investors know the significance of that statement and with Greece's bond payment due in March; the country has to take necessary steps to secure funds before time really runs out. International lenders have given the nation time until the middle of this week to adhere to the new additional austerity demand. Upon failing to get the necessary done within the deadline, Greece will miss out on the package and be left with nearly empty coffers which would lead to a debt default. That might also see Greece making an exit from the euro. The situation seemed bleak after far-right leader George Karatzaferis said that the manner in which fellow European nations had treated Greece was "humiliating" and he would not support the austerity norms.

On the domestic front, The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced that the trade deficit had increased to $48.8 billion in December. The report stated: "Total December exports of $178.8 billion and imports of $227.6 billion resulted in a goods and services deficit of $48.8 billion, up from $47.1 billion in November, revised. December exports were $1.2 billion more than November exports of $177.5 billion. December imports were $3.0 billion more than November imports of $224.6 billion".

The financial sector ended in the red zone with the Financial SPDR Select Sector Fund ( XLF ) inching down by a percent. Among the bellwethers, Citigroup, Inc. (NYSE: C ), American Express Company (NYSE: AXP ), Bank of America Corporation (NYSE: BAC ), The Goldman Sachs Group, Inc. (NYSE: GS ) and Morgan Stanley (NYSE: MS ) dropped 2.2%, 1.0%, 1.3%, 1.5% and 3.3%, respectively.

 


 
AMER EXPRESS CO ( AXP ): Free Stock Analysis Report
 
BANK OF AMER CP ( BAC ): Free Stock Analysis Report
 
CITIGROUP INC ( C ): Free Stock Analysis Report
 
GOLDMAN SACHS ( GS ): Free Stock Analysis Report
 
MORGAN STANLEY (MS): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , US Markets

Referenced Stocks: AXP , BAC , C , GS , XLF

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