The US benchmarks fell once again due to the same-old concerns
regarding the increasing likelihood of Greece exiting the euro.
Markets enjoyed an early morning rally after economic readings were
quiet encouraging. However, in the face of the Greek turmoil, which
even looks to threaten the world economy, the gains had to
ultimately give way to losses.
The Dow Jones Industrial Average (DJI) dropped 0.3% and closed
at 12,598.55. The Standard & Poor 500 (S&P 500) lost 0.4%
to finish yesterday's trading session at 1,324.80. The tech-laden
Nasdaq Composite Index slumped 0.7% and was down to 2,874.04. The
fear-gauge CBOE Volatility Index (VIX) edged up 1.4% to settle at
22.27. Consolidated volumes on the New York Stock Exchange, Nasdaq
and American Stock Exchange were roughly 7.59 billion shares,
higher than the daily average of 6.79 billion. Decliners easily
outpaced advancing stocks on the NYSE; as for 66% stocks that
declined, 31% stocks were on the positive side. The remaining 3%
stocks were left unchanged.
The Dow, like its fellow benchmarks, has been battered heavily
all through this month. On the first day of the month the
blue-chip index had hit a four-year high. However since then, the
index has hardly provided any reason to the investors to cheer
about. The blue-chip index has notched up just one gain since May
1st and has now lost 4.7%. In the light of the present scenario,
the index looks poised to post a monthly loss and it is trading
down 4.4% this month. If the Dow does not recoup all of those
monthly losses, this would be the Dow's first monthly decline since
September last year.
Even yesterday, things were no different for the Dow. Investors'
sentiment had turned for the good early yesterday and the Dow was
up almost 91 points. However, with Greek concerns once again
overshadowing positive catalysts, it had to suffer its
fourth-straight decline. Moreover, with Wednesday's decline, the
Dow has finished 10 times in the red out of the last 11 trading
sessions.
As mentioned earlier, the day had started on an upbeat note
buoyed by positive economic readings and indications provided by
the minutes of the Federal Open Market Committee's meeting. The Fed
minutes boosted sentiment, as it once again raised hopes of the
further monetary policy measures. The Fed minutes noted that
'several' members opined that monetary easing would be a
requirement if economic momentum declines.
Separately, the U.S. Department of Housing and Urban Development
reported that privately-owned housing starts in April jumped 2.6%
to a seasonally adjusted annual rate of 717,000 from March's
revised estimates. This was also ahead of the consensus estimates
of housing starts reaching 683, 000. However, privately-owned
housing units authorized by building permits in April dropped 7.0%
from March to a seasonally adjusted annual rate of 715,000.
Separately, the Board of Governors of the Federal Reserve System
reported a 1.1% increase in industrial production in April. This
came in well ahead of consensus estimates of an increase of 0.6%.
The report further noted: "Manufacturing output increased 0.6
percent in April after having decreased 0.5 percent in March.
Excluding motor vehicles and parts, which increased nearly 4
percent, manufacturing output moved up 0.3 percent, and output for
all but a few major industries increased. Production at mines rose
1.6 percent, and the output of utilities gained 4.5 percent after
unseasonably warm weather in the first quarter held down demand for
heating".
Despite these positives, markets were in the red once again
thanks to the Greek crisis. The nation has decided to go back to
polling once again on June 17. This would be the nation's second
vote in quick succession as Greece has failed to form a government.
With no government in place, there is obviously no one at the helm
of affairs at the moment to negotiate for the next bailout package.
Political uncertainty has increasingly intensified and has
increased chances of Greece exiting the euro. Thus, with heightened
fears regarding Greece, which is even a threat to global markets,
the US benchmarks had to undergo another set of declines.
Coming to sector-wise performances, financials and materials had
a bad day. The Financial Select Sector SPDR (XLF) and the Materials
Select Sector SPDR (XLB) declined 1.5% and 1.1%, respectively.
Financial bellwethers including Bank of America Corporation (NYSE:
BAC
), Citigroup Inc. (NYSE:
C
), JPMorgan Chase & Co. (NYSE:
JPM
), The Goldman Sachs Group, Inc. (NYSE:
GS
) and Morgan Stanley (NYSE:
MS
) slumped 2.6%, 3.1%, 2.2%, 1.7% and 4.2%, respectively. Among
material stocks, E I Du Pont De Nemours And Co (NYSE:
DD
), Freeport-McMoRan Copper & Gold Inc. (NYSE:
FCX
), Southern Copper Corp (NYSE:
SCCO
) and HudBay Minerals Inc (NYSE:
HBM
) dropped 0.6%, 0.3%, 0.7% and 2.4%, respectively.
BANK OF AMER CP (BAC): Free Stock Analysis
Report
CITIGROUP INC (C): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
Report
FREEPT MC COP-B (FCX): Free Stock Analysis
Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
HUDBAY MINERALS (HBM): Free Stock Analysis
Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
MORGAN STANLEY (MS): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis
Report
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