A number of mixed earnings reports from U.S. retailers and
investor apprehensions ahead of Friday's fiscal cliff
negotiations at the White House left the benchmarks languishing
in the red. Meanwhile, initial claims surged over the previous
week and jumped to their highest level in 18 months. The Euro
zone slipped back into recession for the second time since 2009.
Meanwhile, the utilities and technology sectors were the major
losers among the S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) dropped 0.2% to close the
day at 12,542.46. The Standard & Poor 500 (S&P 500) shed
0.2% to finish yesterday's trading session at 1,353.33. The
tech-laden Nasdaq Composite Index lost 0.4% to end at 2,836.94.
The fear-gauge CBOE Volatility Index (VIX) surged 0.4% to settle
at 17.99. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 7.26 billion
shares, significantly higher than the year-on-year daily average
of 6.5 billion shares. Declining stocks easily outpaced advancers
on the NYSE; as for 66% stocks that fell, only 32% stocks moved
higher.
Benchmarks ended in the red for the third consecutive day as
investors continued to worry about whether the fiscal cliff would
be resolved in time. Benchmarks have fallen steadily after
President Barack Obama's re-election. The S&P 500 has tumbled
5.3% since November 6, the S&P 500's worst seven day decline
in a year.
Coming to the details of corporate earnings, a number of U.S
retailers released mixed earnings reports and outlooks. Wal-Mart
Stores, Inc. (NYSE:
WMT
) tumbled 3.6% after the company posted its quarterly numbers.
Revenues fell short of the Street's estimates and the company
forecasted a dismal outlook for fourth-quarter profits. Ross
Stores, Inc. (NASDAQ:
ROST
) also fell 1.3% after the company forecasted fourth-quarter
earnings which disappointed analysts. On the other hand, Target
Corporation (NYSE:
TGT
) surged 1.7% after profits topped analysts' estimates and the
company presented a strong outlook for the next
quarter.
Investors now expectantly await Friday's meeting between top
Republican and Democratic leaders, who will be discussing ways
and means to avoid the impending fiscal cliff. If U.S. law makers
fail to resolve the fiscal cliff of $600 billion in tax increases
and government spending then its impact will be felt from the
beginning of the next year. President Barack Obama emphasized the
need to increase tax rates for wealthy American saying:"What I
have told leaders privately as well as publicly is that we cannot
afford to extend the Bush tax cuts for the
wealthy."
According to the U.S. Department of labor, the advance figure for
seasonally adjusted initial claims increased by 78,000 to 439,000
for the week ending November 10 from the prior week's revised
figure of 361,000. This was way above consensus estimates of
385,000. According to the labor department a surge in initial
claims was largely due to the destruction caused by Hurricane
Sandy. Meanwhile, Federal Reserve Bank's business activity index
for the Philadelphia region contracted in November. According to
the report, the index fell more than 16 points from the previous
month to -10.7, below consensus estimates of 0.25.
Meanwhile, Federal Reserve minutes hinted that the central bank
would possibly announce a new bond buying agenda in December to
increase employment. Under the ongoing program called "Operation
Twist", the Fed has been buying $45 billion in longer term bonds
while selling the same amount in short term debt in another bid
to decrease the rates. Operation Twist will expire at the end of
the year.
On the international front, the Euro zone fell back into
recession in the third-quarter for the second time since 2009.
Euro zone GDP fell 0.1% in the third-quarter from the previous
quarter. The region was largely hit by its debt crisis. The Euro
zone was also affected by a decline in U.S. demand, which is the
region's largest export partner. Unemployment rates in Spain and
Greece have surged over 25%.
Technology sector bellwether Apple Inc. (NASDAQ:
AAPL
) lost 2.1% and dragged the technology sector lower. Company
shares have fallen 25% since touching their highest level in
September. The Technology SPDR (XLK) fell 0.7% and was the major
loser among the S&P 500 industry groups. Stocks such as
Hewlett-Packard Company (NYSE:
HPQ
), Microsoft Corporation (NASDAQ:
MSFT
), Dell Inc. (NASDAQ:
DELL
) and SanDisk Corporation (NASDAQ:
SNDK
) dropped 0.4%, 0.7%, 0.2% and 1.4%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
MICROSOFT CORP (MSFT): Free Stock Analysis
Report
ROSS STORES (ROST): Free Stock Analysis
Report
SANDISK CORP (SNDK): Free Stock Analysis
Report
TARGET CORP (TGT): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research