A positive initial claims report failed to lift benchmarks as
incremental borrowing costs in Europe and concerns about the
region's debt crisis dented the markets once again. Selling
intensified further after a key benchmark fell below a technical
level.
The Dow Jones Industrial Average (DJIA) slumped 134 points or
1.1% to settle at 11,770.88. The Standard & Poor 500 (S&P
500) plunged 1.7% and closed at 1,216.18. The Nasdaq Composite
Index settled at 2,587.99, dropping roughly 2.0%. The fear-gauge
CBOE Volatility Index (VIX) moved up to trade over 34. On the New
York Stock Exchange, Amex and Nasdaq, consolidated volumes were 8.6
billion shares, higher than the current daily average which is just
above 8 billion shares. For four stocks that declined on the NYSE,
only one stock managed to settle in the green.
All of the 30 Dow components settled in negative territory,
except Verizon Communications Inc. (NYSE:
VZ
) and Wal-Mart Stores Inc. (NYSE:
WMT
) that managed negligible gains of 0.1% and 0.09%. Leading the
declines were Alcoa, Inc. (NYSE:
AA
), American Express Company (NYSE:
AXP
), E. I. du Pont de Nemours and Company (NYSE:
DD
), General Electric Company (NYSE:
GE
), Hewlett-Packard Company (NYSE:
HPQ
), JPMorgan Chase & Co. (NYSE:
JPM
) and United Technologies Corp. (NYSE:
UTX
) which dropped 3.5%, 3.0%, 2.2%, 1.9%, 2.3%, 3.1% and 2.3%,
respectively.
The blue-chip index had shed more than 200 points at one point,
but it recouped some of those later. However, incremental worries
are having an adverse impact and the Dow is down 325 points over
the last two sessions.
Selling intensified once investor confidence was further dented
after the S&P 500 index fell below the key technical level of
1,225. The index had failed to break above the said level for two
months starting August, until late October when it reached a
two-month high.
As strategists and central banks struggle to ease European debt
concerns, borrowing costs of some of the nations of region have
been mounting. Italian 10-year bond yields had soared over 7% last
week, causing significant damage to the markets. Italian
bond-yields have once again reached this unsustainable level, and
Spanish bonds have hit their highest levels since 1997. The Spanish
Treasury sold 10-year bills with a maximum value over 7%. France is
also not far behind in the race as its borrowing cost are also
showing an upward movement.
As fears gripped the markets and recessionary worries weighed on
investor sentiment, a strong report from the Labor department and a
rebound in permits for future home construction could hardly make
any impact. The U.S. Department of Labor reported that
seasonally adjusted initial claims for the week ending November 12
had decreased by 5,000 from the prior week's revised figure of
393,000. The data not only came in ahead of 394, 000, the consensus
estimate for the current period, but was also at its lowest level
in seven-months.
In a separate report, the U.S. Census Bureau and the Department
of Housing and Urban Development said: "Privately-owned housing
units authorized by building permits in October were at a
seasonally adjusted annual rate of 653,000. This is 10.9 percent
(±1.6%) above the revised September rate of 589,000 and is 17.7
percent (±3.4%) above the October 2010 estimate of 555,000". As for
the housing starts, the report stated that "privately-owned housing
starts in October were down 0.3% following a 7.7% rally in
September to a seasonally adjusted annual rate of 628,000".
ALCOA INC (
AA
): Free Stock Analysis Report
AMER EXPRESS CO (
AXP
): Free Stock Analysis Report
DU PONT (
EI
) DE (
DD
): Free Stock Analysis Report
GENL ELECTRIC (
GE
): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis
Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
UTD TECHS CORP (UTX): Free Stock Analysis
Report
VERIZON COMM (VZ): Free Stock Analysis Report
WAL-MART STORES (WMT): Free Stock Analysis
Report
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