The year started with indices settling in the red on Thursday as investors chose to book profits. Incidentally, after the benchmarks' record multi-year annual gains in 2013, they started a year in the red for the first time since 2008. The drop came despite a fall in initial claims number, which further underscored economic strength. Tech bellwether Apple was a big loser yesterday and so it dragged the technology sector.APPLE INC (AAPL): Free Stock Analysis ReportHEWLETT PACKARD (HPQ): Free Stock Analysis ReportINTL BUS MACH (IBM): Free Stock Analysis ReportMICROSOFT CORP (MSFT): Free Stock Analysis ReportMICRON TECH (MU): Free Stock Analysis ReportNETFLIX INC (NFLX): Free Stock Analysis ReportORACLE CORP (ORCL): Free Stock Analysis ReportTo read this article on Zacks.com click here.
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Looking at the indices, the Dow Jones Industrial Average incurred 135 points or 0.8% drop to 16,441.35. The Standard & Poor 500 was down 0.9% to 1,831.98. The tech-laden Nasdaq Composite index closed at 4,143.07, down 0.8%. The fear-gauge CBOE Volatility Index (VIX) rose 3.7% to 14.23. Composite volumes on the nation's exchanges remained low at about 3.1 billion. The decliners outpaced advancers on the New York Stock Exchange by a ratio of 2 to 1.
Benchmarks might have ended on the losing side on the first day of this year, but economic data, rather the initial claims number is something that highlighted the economy's reviving nature. According to the U.S. Department of Labor, the advance figure for seasonally adjusted initial claims was down by 2,000 to 339,000 in the week ending Dec 28. The second consecutive decline in initial claims number was also larger than consensus estimates of a drop to 342, 000.
Separately, manufacturing sector's economic activity was reported to have expanded for the seventh straight month. However, it expanded at a lower rate. The Institute for Supply Management noted that its PMI stood at 57 in December, 0.3 percentage point below November's 57.3. New Orders Index rose to its best reading since Apr 2010 when it gained 0.6 percentage point to 64.2 in December.
However, investors hardly paid any heed to these data and instead opted to book profits. Year 2013 saw benchmarks clinching their best yearly-performances in many years. In fact, benchmarks ended on new highs on many occasions through 2013 and the last day of the year was no exception. The Dow hit its 52nd record high this year on Dec 31, signing off the year with gains of 26.5%. This marked the blue-chip index's best yearly performance since 1995. The S&P 500 gained 29.6% for the year, its record best since 1997. The Nasdaq outperformed the fellow benchmarks as it jumped 38.3% in 2013, notching its best annual performance since 2009.
Talking of records, this year too started with benchmarks registering themselves in the record book. However, it was on the dismal side as markets suffered its first start in the red in a year since 2008.
Some top gainers of 2013 had a dismal run yesterday. Netflix, Inc. (NASDAQ: NFLX ) for instance dropped 1.5% yesterday, which had otherwise tripled its value in 2013. Micron Technology, Inc. (NASDAQ: MU ) too was a big performer in 2013 but it dropped 0.4% yesterday.
However, a particular stock that largely dented the broader sector was Apple Inc. (NASDAQ: AAPL ). The stock dropped 1.4% following a downgrade by Wells Fargo. The iPhone maker was downgraded from "Outperform" to "Market Perform". Reportedly, concerns of a possible drop in profit of every iPhone 6 sale among other key reasons led to the downgrade. However, its 12-month target price was left untouched at $536 to $581.
The drop in Apple stock s also dampened the broader technology sector and Technology SPDR ETF (XLK) dropped about 1%. Among other tech stocks, International Business Machines Corp. (NYSE: IBM ), Oracle Corporation (NYSE: ORCL ), Microsoft Corporation (NASDAQ: MSFT ), Hewlett-Packard Company (NYSE: HPQ ) and Intel Corporation (NASDAQ: INTC ) dropped 1.1%, 1.1%, 0.7%, 1.1% and 0.6%, respectively.