Stock Market News for May 10, 2012 - Market News


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Markets extended their losing streak after inflated borrowing costs in Spain and lingering uncertainty about the political environment in Greece weighed on investors' mind yesterday. Following its sixth-consecutive loss, the Dow recorded its longest losing streak since the one that ended on August 2, 2011.

The Dow Jones Industrial Average (DJI) declined 0.8% to close at 12,835.06. The Standard & Poor 500 (S&P 500) finished yesterday's trading 0.7% lower at 1,354.58. The Nasdaq Composite Index shed 0.4% and was down to 2,934.71. The fear-gauge CBOE Volatility Index (VIX) jumped 5.4% to settle at 20.08. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were 7.79 billion shares, higher than the daily average of roughly 6.8 billion shares. Declining stocks had the advantage over the advancers on the NYSE, as for every two stocks that traded lower, only one stock moved up.

Over the past few trading sessions the fear-gauge index has been trading consistently higher, except for Monday. The VIX is a key market indicator, as it reflects the amount of apprehension or the amount of confidence that exists in the market. Over the past five days, the VIX has moved almost 19% higher and is now back over 20. Compared to last month, the VIX has gained 6.7%. Thus, the index clearly shows that investors' have been losing their confidence in the market and are growing increasingly uncertain about economic conditions.

The VIX's uptrend is quiet justifiable, as economic reports from across the Atlantic have been discouraging. In fact, the labor market too has failed to spark off any optimism. Europe has been a constant bother of late following reports that Spain is moving back into recession and a continuously uncertain political scenario giving. Obviously, the concerns have been a drag on the markets and the Dow has lost almost 444 points over the past six trading days.

Things failed to take a positive yesterday as well, as Greece continued to struggle to form a government and Spain witnessed inflated borrowing costs. The 10-year bond yield of Spain went shooting up to 6.063%, increasing by 28 basis points. Italy too witnessed a 21 basis points jump in its 10-year yield. These reflected investors' apprehension about the nations' economic health.

A few sessions earlier, Spain had been in the focus with its surging borrowing costs and appears to be moving back into recession. While calm prevailed for a few days, the uptrend in bond yields is once again haunting investors. Moreover, this comes amidst the uncertain political scenario of Europe. Francois Hollande has taken over as France's president from Nicolas Sarkozy. Sarkozy had been instrumental in dealing with strict austerity norms, and his ouster leaves the fate of such economic measures uncertain. Meanwhile, Greece is yet to form a government. However, the popular belief is that Greece might exit the euro which would have serious implications on the global financial arena.

With these lingering concerns and the surging borrowing costs yesterday, the financial sector suffered a heavy fall. The Financial Select Sector SPDR (XLF) was down 1.1% and stocks including Bank of America Corp (NYSE: BAC ), American Express Company (NYSE: AXP ), Goldman Sachs Group, Inc. (NYSE: GS ), Morgan Stanley (NYSE: MS ), UBS AG (NYSE: UBS ) lost 0.8%, 0.7%, 1.9%, 2.2% and 2.4%, respectively.

AMER EXPRESS CO (AXP): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , US Markets
More Headlines for: AXP , BAC , GS , MS , XLF

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