Investor concerns over domestic and international growth and
mixed earnings reports dragged benchmarks into negative
territory. On Wednesday, bearish sentiments gained strength after
the Fed signaled it may stop or slow regular bond buying.
Benchmarks finished in the red for the second consecutive day and
the S&P 500 logged its biggest two-day loss since November
2012. Meanwhile, initial claims surged in the previous week,
bucking the trend. The consumer staples sector was the lone
gainer among the S&P 500 industry groups while the materials
was the biggest loser.
The Dow Jones Industrial Average (DJI) decreased 0.3% to close
the day at 13,880.62. The S&P 500 decreased 0.6% to finish
yesterday's trading session at 1,502.42. The tech-laden Nasdaq
Composite Index lost 1.0% to end at 3,131.49. The fear-gauge CBOE
Volatility Index (VIX) increased 3.7% to settle at 15.22.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 7.64 billion shares, well
above the daily average of 6.45 billion shares in 2012. Declining
stocks outnumbered the advancing stocks. For the 28% that
advanced, 69% declined.
On Wednesday, major indices slipped into the red after the Fed
signaled it might stop or slow down the process of purchasing $85
billion worth of treasuries and bonds. Yesterday's trading
session was mostly dominated by growth concerns from the U.S. and
Europe. The Purchasing Managers' Index for the Euro Zone fell to
47.3 this month from 48.6 in the previous month. This follows
news of French output slipping to its lowest level in nearly four
years. According to Foreign Minister Laurent Fabius, growth may
shrink to between 0.2% and 0.3% for 2013, from the previously
On the domestic front, the Federal Reserve Bank of
Philadelphia's index which measures manufacturing activity
surprisingly dropped to an eight-month low of -12.5 from previous
month's -5.8. New orders index also fell from -4.3, in the
previous month, to -7.8. After posting encouraging numbers in
recent weeks, seasonally adjusted initial claims increased 20,000
to 362,000 in the previous week. This was well above the estimate
Meanwhile, the National Association of Realtors released
existing home sales data which noted a marginal improvement.
Existing home sales came in at 4.92 million for January from the
revised December figure of 4.9 million. This was slightly above
the consensus estimate of 4.9 million. According to Lawrence Yun
NAR chief economist "Buyer traffic is continuing to pick up,
while seller traffic is holding steady."
On the earnings front, shares of retail giant Wal-Mart Stores,
) gained 1.5% after it posted encouraging results for the
reported quarter, beating the Street's estimates. Shares of
credit-card terminal maker, VeriFone Systems Inc (NYSE:
) plunged 42.8% after the company guided the first and second
quarter earnings well below the Street's estimates. The low
profits of the company are attributable to sluggishness in the
European economy. Meanwhile, shares of electric car maker,
Tesla Motors Inc (NASDAQ:
) contracted 8.8% after it posted a loss for the fourth quarter.
According to the company, the loss is attributable to high
Among the top ten S&P 500 industry groups, consumer staple
stocks were the only gainer. The Consumer Staples Select Sect.
SPDR (XLP) gained 0.3%. Stocks such as Philip Morris
International Inc. (NYSE:
), Altria Group, Inc. (NYSE:
), Target Corporation (NYSE:
) and Dollar Tree, Inc. (NASDAQ:
) increased 1.1%, 0.9%, 1.2% and 2.9%, respectively.
Materials stocks were the biggest losers among the S&P
500's groups. The Materials Select Sector SPDR (XLB) lost 0.9%.
Shares such as The Dow Chemical Company (NYSE:
), Praxair, Inc. (NYSE:
), Ecolab Inc. (NYSE:
), Mosaic Co (NYSE:
) and Alcoa Inc. (NYSE:
) lost 2.5%, 0.4%, 1.1%, 1.3% and 1.1%, respectively.
ALCOA INC (AA): Free Stock Analysis Report
DOLLAR TREE INC (DLTR): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis
ECOLAB INC (ECL): Free Stock Analysis Report
ALTRIA GROUP (MO): Free Stock Analysis Report
MOSAIC CO/THE (MOS): Free Stock Analysis
VERIFONE HLDGS (PAY): Free Stock Analysis
PHILIP MORRIS (PM): Free Stock Analysis
PRAXAIR INC (PX): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis
WAL-MART STORES (WMT): Free Stock Analysis
To read this article on Zacks.com click here.