Benchmarks closed in the red for the second consecutive day as
investor concerns about fourth-quarter earnings once again
dragged markets lower. Meanwhile, earnings have started coming in
and analysts are expecting profits will marginally improve from
the previous quarter. Unemployment in the Euro Zone touched its
highest level in November 2012 since the creation of the euro in
1999. The home building sector emerged as the biggest gainer
among the S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) lost 0.4% to close the day
at 13,328.85. The Standard & Poor 500 (S&P 500) declined
0.3% to finish yesterday's trading session at 1,457.15. The
tech-laden Nasdaq Composite Index slipped 0.2% to end at
3,091.81.The fear-gauge CBOE Volatility Index (VIX) lost 1.2% to
settle at 13.62. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.19
billion shares, lower than the 2012 daily average of 6.42 billion
shares. Declining stocks outpaced advancers on the NYSE; as for
51% stocks that fell, 45% moved higher.
Stocks continued to fall on Tuesday as investors remained
apprehensive about fourth-quarter corporate earnings. In the
previous week, benchmarks began the first trading week of the New
Year with a bang as law makers sealed a deal on the Fiscal Cliff
issue. The previous week's rally had pushed the S&P 500 to
its highest level since 2007.
According to the Street's estimates fourth-quarter profits will
be marginally better than the third-quarter profits. Current
estimates for the fourth-quarter corporate results are well below
October's estimates. According to data from Thomson Reuters,
fourth-quarter earnings are estimated to grow by 2.7%. Markets
experts are expecting issues like Hurricane Sandy, the
Presidential elections and the turmoil over the Fiscal Cliff to
spring many surprises during earnings season. During the
third-quarter, S&P 500 revenue declined 0.8% and earnings
grew only 0.1%.
Meanwhile, Monsanto Company (NYSE:
) surged 2.7% following its first-quarter results. The company
first-quarter earnings came in above the Street's estimates. The
company said profit in the first-quarter was boosted by a growth
in seeds sales in Latin America. Monsanto has also increased its
earnings outlook for 2013. Alcoa Inc. (NYSE:
) was scheduled to report after Tuesday's closing bell.
Monsanto's better-than-expected earnings report helped the
materials sector finish in the green. The Materials Select Sector
SPDR (XLB) gained 0.2%. Stocks such as E I Du Pont De Nemours And
), FMC Corporation (NYSE:
), PPG Industries, Inc. (NYSE:
) and Cabot Corp (NYSE:
) added 0.6%, 0.8%, 1.4% and 0.2%, respectively.
On the international front, a report from statistical agency
Eurostat revealed unemployment in the Euro zone increased to
11.8% in November from 11.7% in October 2012. Unemployment has
touched its highest level since the inception of the euro in
1999. According to the report, around 2 million people lost their
jobs in the Euro zone between November 2011 and the same period
On the domestic front, only one report was released on Tuesday.
Consumer credit increased by $16.1 billion in November, beating
the consensus estimate of $12 billion. Consumer credit surged at
a seasonally adjusted annual rate 7% in November. Revolving
credit surged at an annual rate of 1% whereas nonrevolving credit
surged 9.5% annually.
The housing sector was the biggest gainer among the S&P 500
industry groups and the SPDR S&P Homebuilders (XHB) gained
0.4%. Stocks such as The Home Depot, Inc. (NYSE:
), Lowe's Companies, Inc. (NYSE:
), PulteGroup, Inc. (NYSE:
), M.D.C. Holdings, Inc. (NYSE:
) and Meritage Homes Corporation (NYSE:
) surged 0.6%, 0.1%, 1.0%, 0.1% and 1.8%, respectively.
ALCOA INC (AA): Free Stock Analysis Report
CABOT CORP (CBT): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
FMC CORP (FMC): Free Stock Analysis Report
HOME DEPOT (HD): Free Stock Analysis Report
LOWES COS (LOW): Free Stock Analysis Report
MDC HLDGS (MDC): Free Stock Analysis Report
MONSANTO CO-NEW (MON): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
PPG INDS INC (PPG): Free Stock Analysis
To read this article on Zacks.com click here.