Markets' volatile run yesterday ended with benchmarks closing
flat as positive signs from across the Atlantic erased almost all
of the day's losses during the final hour. The benchmarks may have
closed mixed or just slightly higher from levels they started the
day with, but this was a great rebound from the slump they suffered
earlier during the day. Materials were a big catalyst and
tech-bellwether Apple once again enabled Nasdaq to finish in the
green.
The Dow Jones Industrial Average (DJI) slipped a mere 0.1% or
over 6 points to end at 12,496.15. The Standard & Poor 500
(S&P 500) gained 0.2% and moved a little over 2 points higher
to finish yesterday's trading session at 1,318.86. The tech-laden
Nasdaq Composite Index was up 0.4% and closed at 2,850.12. The
fear-gauge CBOE Volatility Index (VIX) dropped 0.7% and settled at
22.33. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 7.52 billion
shares, higher than the year-on-year average of 6.84 billion
shares. Advancers edged past the decliners on the NYSE; as for
three stocks that gained, two stocks traded lower.
Yesterday's volatile run was quiet akin to Tuesday's session,
except that on Tuesday the benchmarks traded higher all day long
only to lose almost all of these gains in the final hour. On
Wednesday, it was the other way round. Benchmarks lingered in the
red all day long, making a comeback only during the final hour.
Moreover, late-hour concerns of Tuesday spilled on to Wednesday
morning. Former Greek Prime Minister Lucas Papademos told Dow Jones
Newswires that Greece was preparing to exit the euro. Greek
concerns are nothing new for the benchmarks though, and it
continued to affect the sentiments on Wednesday. Additionally,
reports suggested that some European officials were of the view
that euro zone members needed to step up a contingency plan if
Greece were to leave the euro. Reportedly, this consensus was
reached via a teleconference of the Eurogroup Working Group
(EWG).
However, while Lucas Papademos told CNBC that he had no
knowledge of any preparation by Greece for an euro exit, reports of
a contingency plan were also rubbished by the Greek Finance
Ministry. According to an email from the ministry: "The
Ministry of Finance categorically denies the reports stating that
during the teleconference of the Euro Working Group on May 21st
2012, it was agreed that each euro zone country should prepare
contingency plans for the potential consequences of a
departure of the Hellenic Republic from the single currency
area… "Such reports not only are false, but actually hinder the
efforts of the Hellenic Republic to address its challenges at this
critical juncture".
With these concerns taking a backseat for the day and positive
signs emerging, the Dow recouped a loss of 191 points. The S&P
500 and Nasdaq also recovered from their day's lows of 1,296.53 and
2,795.50, respectively. Yesterday's change of fortunes can be
attributed to Italian and French leaders agreeing to boost economic
growth via region-wide bonds. Reportedly, French President Francois
Hollande and Italian Prime Minister Mario Monti met ahead of the
informal summit at Brussels and discussed boosting the regions'
economy by launching euro-zone bonds. These bonds will be debt
issued together by all the euro-zone members. However, German
Chancellor Angela Merkel opposed the idea saying that the European
Union's terms prohibit "taking on of joint liability" of debt "and
according to our opinion that also includes euro bonds".
As for the sectors, the Materials Select Sector SPDR (XLB)
jumped 1.2% and contributed to benchmarks' rebound. Among the
material components, E I Du Pont De Nemours And Co (NYSE:
DD
), Newmont Mining Corporation (NYSE:
NEM
), The Mosaic Company (NYSE:
MOS
), Freeport-McMoRan Copper & Gold Inc. (NYSE:
FCX
) and PPG Industries, Inc. (NYSE:
PPG
) jumped 0.3%, 2.9%, 2.5%, 1.9% and 1.6%, respectively.
Separately, the largest component of the Nasdaq and the most
valuable company Apple Inc.'s (NASDAQ:
AAPL
) gain of 2.4% was crucial for the benchmark's green finish.
However, other tech bellwethers including International Business
Machines Corp. (NYSE:
IBM
), Microsoft Corporation (NASDAQ:
MSFT
), Red Hat, Inc. (NYSE:
RHT
) and Hewlett-Packard Company (NYSE:
HPQ
) slumped 0.4%, 2.2%, 3.4% and 3.2%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
DU PONT (EI) DE (DD): Free Stock Analysis
Report
FREEPT MC COP-B (FCX): Free Stock Analysis
Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
INTL BUS MACH (IBM): Free Stock Analysis Report
MOSAIC CO/THE (MOS): Free Stock Analysis Report
MICROSOFT CORP (MSFT): Free Stock Analysis
Report
NEWMONT MINING (NEM): Free Stock Analysis
Report
PPG INDS INC (PPG): Free Stock Analysis Report
RED HAT INC (RHT): Free Stock Analysis Report
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