Markets ignored apprehensions arising out of political changes
in Greece and France, and but for the Dow, the benchmarks ended in
positive territory. Gains were meager for the S&P 500 and
Nasdaq, but these benchmarks managed to recover from the day's
losses. The Dow had entered the green during the afternoon before
settling modestly lower. Financials were among the day's biggest
gainers, accompanied by homebuilders.
The Dow Jones Industrial Average (DJI) dropped 0.2% to close at
13,008.53. The Standard & Poor 500 (S&P 500) edged up 0.04%
to finish yesterday's trading session at 1,369.58. The tech-laden
Nasdaq Composite Index moved up 0.05% to 2,957.76. The fear-gauge
CBOE Volatility Index (VIX) lost 1.2% and settled at 18.94.
Consolidated volumes on the New York Stock Exchange, the Nasdaq and
the American Stock Exchange were 6.28 billion shares, lower than
the daily average of roughly 6.76 billion shares. Advancing stocks
edged past the decliners on the NYSE, as for every eight stocks
that advanced, seven stocks moved down.
Last Friday, markets suffered a heavy slump, heralding the
benchmarks' worst weekly performance. While disappointing jobs data
dampened sentiment on Friday, a lot of selling pressure was created
by the apprehensions of the investors, who cautiously waited for
the outcome of the presidential election in France. Greece
too was going for elections over the weekend. These political
events kept the investors on their toes last Friday.
However, after results confirmed Nicolas Sarkozy's defeat,
investors shrugged of this development after an initial bout of
selling. Markets opened with news that Francois Hollande had taken
over as France's president winning this crucial round of elections.
A lot would depend on the outcome of these elections, as markets
believed these results would ascertain the next course of action
regarding the lingering Euro-zone crisis. All eyes were
particularly fixed on Sarkozy, who has been a key Euro-zone figure
in this regard, attending, discussing and deciding in coordination
with other political heads on ways to rescue Europe from its
lingering debt woes and save the shared currency from collapsing.
He has been instrumental in dealing with strict austerity norms,
and his ouster leaves the fate of such economic measures
uncertain.
Additionally, Greece too showed their displeasure against the
ruling party and their austerity measures. None of the parties
managed a majority in Greece and that only increased the
uncertainty about how the nation would tackle its financial
problems.
Benchmarks opened lower, but started recouping the losses during
the afternoon and the S&P 500 and Nasdaq each garnered a seat
in the green. The blue-chip index too had turned positive for a
while, but failed to hold on to the gains and dropped slightly
lower. Moving back to France, the new president, Francois Hollande
said that his win was against the Germany-led austerity measures
and said: "In all the capitals... there are people who, thanks to
us, are hoping, are looking to us, and want to reject austerity".
He further commented: "I'm sure in a lot of European countries
there is relief, hope that at last austerity is no longer
inevitable". He struck a note of optimism which lifted the spirit
of some investors, and benchmarks eventually recouped their
losses.
Coming to sectoral stocks, financials were amongst the strongest
performers, with the Financial Select Sector SPDR (XLF) moving 0.6%
higher and KBW Bank Index (BKX) inching up by a percent. As for the
financial bellwethers, Bank of America Corporation (NYSE:
BAC
), Morgan Stanley (NYSE:
MS
), The Goldman Sachs Group, Inc. (NYSE:
GS
), Wells Fargo & Company (NYSE:
WFC
) and U.S. Bancorp (NYSE:
USB
) gained 2.8%, 0.9%, 1.0%, 1.4% and 0.5%, respectively.
Joining the financial sector was the homebuilder sector and the
PHLX Housing Sector (HGX) gained 0.9%. As for the stocks, Toll
Brothers Inc. (NYSE:
TOL
), Lennar Corp. (NYSE:
LEN
), Hovnanian Enterprises Inc. (NYSE:
HOV
), PulteGroup, Inc. (NYSE:
PHM
) and DR Horton Inc. (NYSE:
DHI
) were up 1.3%, 0.9%, 4.1%, 0.6% and 1.0%, respectively.
BANK OF AMER CP (BAC): Free Stock Analysis
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D R HORTON INC (DHI): Free Stock Analysis
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GOLDMAN SACHS (GS): Free Stock Analysis Report
HOVNANIAN ENTRP (HOV): Free Stock Analysis
Report
LENNAR CORP -A (LEN): Free Stock Analysis
Report
MORGAN STANLEY (MS): Free Stock Analysis Report
PULTE GROUP ONC (PHM): Free Stock Analysis
Report
TOLL BROTHERS (TOL): Free Stock Analysis Report
US BANCORP (USB): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis
Report
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