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
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
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
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:
), American Express Company (NYSE:
), Goldman Sachs Group, Inc. (NYSE:
), Morgan Stanley (NYSE:
), UBS AG (NYSE:
) lost 0.8%, 0.7%, 1.9%, 2.2% and 2.4%, respectively.
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UBS AG (UBS): Free Stock Analysis Report
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