Benchmarks ended their two-day rally after minutes of the
Federal Reserve's December policy meeting reflected concerns over
the bond buying program. Despite recent concerns about the Fiscal
Cliff dilemma, private sector jobs increased in December. But the
number of Americans filing for the unemployment benefits surged
during the previous week. The materials sector was the biggest
loser among the S&P 500 industry groups.ASHLAND INC (ASH): Free Stock Analysis ReportDU PONT (EI) DE (DD): Free Stock Analysis
ReportFMC CORP (FMC): Free Stock Analysis ReportMONSANTO CO-NEW (MON): Free Stock Analysis
ReportPPG INDS INC (PPG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
The Dow Jones Industrial Average (DJI) lost 0.2% to close the day
at 13,391.36. The Standard & Poor 500 (S&P 500) slipped
0.2% to finish yesterday's trading session at 1,459.37. The
tech-laden Nasdaq Composite Index shed 0.4% to end at 3,100.57.The
fear-gauge CBOE Volatility Index (VIX) lost 0.8% to settle at
14.56. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 6.68 billion
shares, higher than the daily average of 6.42 billion shares.
Advancing stocks outpaced decliners on the NYSE; as for 51% stocks
that rose, 46% stocks moved lower.
Benchmarks returned to negative territory after two back-to-back
strong rallies following a resolution to the Fiscal Cliff dilemma.
According to the minutes of the Fed's December meeting released on
Thursday, Fed policy makers have different views on bond buying. "A
few members" think the Fed should continue bond buying till the end
of 2013 while "several others" thought the central bank should stop
purchasing bonds "well before" the end of 2013. The central bank's
bond buying program has boosted markets in the past and market
experts think that it will continue until 2014 because unemployment
rates will not fall fast enough this year.
The minutes also said: "Many participants thought the pace of
economic expansion would remain moderate in 2013, before picking up
gradually in 2014 and 2015." Previously, the Federal Reserve had
predicted the economy will grow between 2.3% to 3% in 2013.
Lawmakers sealed a deal on the Fiscal Cliff issue on Tuesday but
delayed a decision on spending cuts by two months. Investor focus
has now shifted to the upcoming war in Congress over spending cuts
and raising the federal debt ceiling. According to Moody's
Investors Service, the Cliff deal approved by Congress is not
enough to avoid the risk of a downgrade to the U.S. credit rating.
Rating agency Standard and Poor's said: "Washington's governance
and policymaking had become less stable."
Despite a recent pull back due to the Fiscal Cliff issue,
Automatic Data Processing's (NASDAQ: ADP )
National Employment report revealed that the U.S. private sector
added 215,000 jobs in December compared to revised November
estimates of 148,000. The report also states large businesses added
87,000 jobs while medium and small businesses added 102,000 and
25,000 jobs respectively during the month. The service-producing
sector added 187,000 jobs whereas the goods-producing sector
accounted for 28,000 more jobs. Construction and
professional/business services added 39,000 and 37,000 jobs
respectively. However, the manufacturing sector reported a decline
of 11,000 jobs.
Meanwhile, the U.S. Department of Labor revealed that initial
claims increased during the previous week. According to the report,
the advance figure for seasonally adjusted initial claims increased
10,000 to 372,000 for the week ending December 29 from the prior's
week revised figure of 362,000. This was below consensus estimates
The materials sector was the biggest loser among the S&P 500
industry groups and the Materials Select Sector SPDR (XLB) lost
0.7%. Stocks such as E I Du Pont De Nemours And Co (NYSE: DD ), FMC
Corporation (NYSE: FMC ), PPG Industries, Inc. (NYSE: PPG ),
Monsanto Company (NYSE: MON ) and Ashland Inc. (NYSE: ASH )
shed 1.3%, 0.9%, 0.6%, 0.8% and 1.7%, respectively.