Markets lost out on most of the day's gains to end mostly flat
following reports that Greece was considering exiting the euro.
Benchmarks had been hovering at high levels all day long after an
economic reading from National Association of Realtors buoyed
sentiment. However, the final hour brought back age-old Greek
concerns to the forefront and markets' gains largely evaporated. As
for the sectors, financials showed some strength while energy and
materials were a drag on the indices.
The Dow Jones Industrial Average (DJI) edged down 0.01% to end
just 1.67 points lower at 12,502.81. The Standard & Poor 500
(S&P 500) moved up by a negligible 0.05% or 0.64 points to
finish yesterday's trading session at 1,316.63. The tech-laden
Nasdaq Composite dropped 0.3% and ended at 2,839.08. The fear-gauge
CBOE Volatility Index (VIX) gained 2.1% and settled at 22.48.
Consolidated volumes on the New York Stock Exchange, Nasdaq and the
American Stock Exchange were roughly 7.25 billion shares, somewhat
lower than last year's daily average of 7.84 billion. The advancers
and the decliners had a relatively thin difference; as for 50% of
the stocks that advanced on the NYSE, 47% stocks closed lower.
Benchmarks enjoyed smooth sailing almost through the entire
trading session till the final hour. Markets encountered a volatile
period during the closing hour as benchmarks dropped and again
recouped most of their losses to end on a flat note. The Dow had
moved up to 12, 575.96 at a point and in the final hours it lost
out on all of its gains to hover around 50 points lower. Finally, a
rebound at the final stage helped it to close almost unchanged. The
S&P 500 too had moved up by 12 points during the day, before
losing almost all of these gains. It was encouraging housing data
that had lifted the mood earlier in the day. However, Greek
concerns returned to the markets to wash away these gains later.
Thus, markets failed to chalk up their second straight day of
The National Association of Realtors reported an upside in
existing-home sales in April, which also was on a higher note on a
year-on-year basis. According to the report, total existing-home
sales moved 3.4% higher to a seasonally adjusted annual rate of
4.62 million in last month, up from a downwardly revised 4.47
million reported in March. It also jumped a significant 10.0% from
April 2011's level of 4.20 million. Lawrence Yun, the chief
economist of NAR, commented: "It is no longer just the investors
who are taking advantage of high affordability conditions. A
return of normal home buying for occupancy is helping home sales
across all price points, and now the recovery appears to be
extending to home prices".
The housing sector was most likely to benefit from this report
and the PHLX Housing Sector (HGX) jumped 1.3%. Among the housing
stocks, Toll Brothers Inc. (NYSE:
), Lennar Corp. (NYSE:
), PulteGroup, Inc. (NYSE:
) and KB Home (NYSE:
) jumped 1.8%, 2.2%, 2.5% and 3.2%, respectively. The financial
sector also looked promising with The Goldman Sachs Group, Inc.
), JPMorgan Chase & Co. (NYSE:
), Wells Fargo & Company (NYSE:
) and Bank of America Corporation (NYSE:
) jumping 1.1%, 4.6%, 0.9% and 2.2%, respectively.
However, reports of former Greek Prime Minister Lucas Papademos
telling Dow Jones Newswires that Greece was preparing for an euro
exit dampened the sentiment in the final stages of the trading day.
Concerns about Greece are not new and benchmarks have suffered
enough of a battering due to them. Yesterday, the former prime
minister said: "I share the view that if Greece defaults and exits
the euro, the consequences for the euro zone-its financial system
and real economy-will be profound and the associated cost will be
significant and far-reaching. It will also affect the economies of
other countries outside the euro zone". Sounding a reminder over
the catastrophic consequences of such a decision, he said: "it
cannot be excluded that preparations are being made to contain the
potential consequences of a Greek euro exit".
The materials and energy sector were a drag on the markets.
While Energy Select Sector SPDR (XLE) dropped 0.2%, the Materials
Select Sector SPDR (XLB) was down 0.6%. As for energy shares,
Halliburton Company (NYSE:
), Transocean Ltd. (NYSE:
) and Schlumberger Limited (NYSE:
) lost 1.3%, 0.9% and 0.5%, respectively. Materials components
including Freeport-McMoRan Copper & Gold Inc. (NYSE:
), E. I. du Pont de Nemours and Company (NYSE:
) and Agrium Inc. (NYSE:
) were down 1.3%, 0.6% and 1.7%, respectively.
AGRIUM INC (AGU): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis
DU PONT (EI) DE (DD): Free Stock Analysis
FREEPT MC COP-B (FCX): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
PULTE GROUP ONC (PHM): Free Stock Analysis
TRANSOCEAN LTD (RIG): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
TOLL BROTHERS (TOL): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
To read this article on Zacks.com click here.