It was a lackluster day of events yesterday as markets slipped
marginally and volumes kept low. Benchmarks opted to take a
breather after two-consecutive days of robust gains last week,
which also set up the Dow's and S&P 500's largest highs since
early May. Investors also awaited action from central banks both on
the domestic front as well as from the other side of the pool
before betting big bucks.
The Dow Jones Industrial Average (DJI) slipped a mere 0.02% to
close 2.65 points lower at 13,073.01. The Standard & Poor 500
(S&P 500) finished yesterday's trading session at 1,385.30,
down by only .67 of a point or 0.05%. The tech-laden Nasdaq
Composite Index fell 0.4% and ended at 2,945.84. The fear-gauge
CBOE Volatility Index (VIX) jumped almost 8% and settled at 18.03.
Consolidated volumes on the New York Stock Exchange, the Nasdaq and
the American Stock Exchange were roughly 5.5 billion shares, lower
than the year-to-date daily average of 6.75 billion shares. The
decliners edged past the advancers on the NYSE; as for 50% stocks
that declined, 47% stocks moved up.
The NYSE clocked volumes of around 3.2 billion shares, the
lowest in two weeks. Thus, the Street was relatively idle yesterday
and the markets' hesitancy for change also showed the lack of major
headlines. Investors are also gearing up for the last major week of
second quarter earnings. Moreover, markets had a busy and steep
ride upside with European Central Bank (ECB) President Mario Draghi
pledging to keep the euro-zone intact. Eventually, it was a calm
session yesterday as the mood was generally cautious.
Draghi's said mid-last week: "Within our mandate, the ECB is
ready to do whatever it takes to preserve the euro". Fresh European
debt concerns had emerged after Spain's 10-year bond yields crossed
the 'unsustainable' 7% mark last week. Draghi's comments were
widely welcomed after Spain's bond yield eased 40 basis points.
European shares ended sharply higher and the ripple effect was
evident in US markets too. The Dow had its fifth 200-plus points
gain for 2012 on Thursday. Following reports of further
developments on the same issue, benchmarks rose to their highest
levels since early May on Friday. On the same day, the Dow rossed
the 13, 000 mark for the first time since May 7 and the S&P 500
touched its highest level since May 3.
Friday's rally was largely sparked by a report by French
newspaper Le Monde that stated that the ECB was preparing to buy
bonds issued by Italy and Spain. According to the report noted (as
translated in English): "While it will take another few days or
even weeks to finalize the device in question, the ECB would
prepare an operation coordinated with the states may limit the
surge in interest rates of Spain , but also the Italy". French
President Francois Hollande and German Chancellor Angela Merkel
were also reportedly discussing these plans.
While hopes of fresh economic stimulus boosted markets last
week, investors awaited the next course of action by the central
bank head and Eurozone leaders. Their cautious stance kept trading
low and restricted benchmarks' movement.
Separately, investors also waited to see what is building up on
the domestic front. Fresh hopes of a third round of quantitative
easing (QE3) resurfaced last week and Friday's bleak GDP data
strengthened those hopes. Investors will have their eyes fixed on
what the central bank has to say after the Federal Reserve's policy
makers' meet concludes on Wednesday. However, U.S. Treasury
Secretary Timothy Geithner met Germany's finance minister and the
two resolved to step up measures to fix European and global
As evident, lackluster trading meant almost no individual sector
registered significant movement. However, considering other Dow
components gained went as much as 1.4%, The Coca-Cola Company
) was one of the biggest gainers among the Dow components and
gained 1,.4%. Separately, JPMorgan Chase & Co. (NYSE:
) was the biggest drag, dropping 2.0%. Among the 30 Dow components,
two of the blue-chip stocks also hit new 52-week highs. These were
AT&T, Inc. (NYSE:
) and Wal-Mart Stores Inc. (NYSE:
) and they ended the day with gains of 0.8% and 0.6%,
JPMORGAN CHASE (JPM): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
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