Benchmarks ended lower on Monday after two consecutive days of
gains as investors remained apprehensive about the fiscal cliff.
Investors also awaited the outcome of talks among Euro zone
finance ministers, International Monetary Fund and European
Central Bank about Greece's debt crisis. Investors were also
worried about the big discounts offered by U.S retailers during
the holiday season. The utilities sector was the biggest gainer
among S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) declined 0.3% to close the
day at 12,967.37. The Standard & Poor 500 (S&P 500)
dropped 0.2% to finish yesterday's trading session at 1,406.29.
The tech-laden Nasdaq Composite Index rose 0.3% to end at
2,976.78. The fear-gauge CBOE Volatility Index (VIX) surged 2.4%
to settle at 15.5. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 5.2
billion shares, significantly lower than the daily average of
6.49 billion shares. Declining stocks outpaced advancers on the
NYSE; as for 55% stocks that declined, 42% stocks moved higher.
Benchmarks began Monday's trading session with a number of
headwinds blocking their progress. The Dow had tumbled more than
100 points in the initial session. Except the Nasdaq, all of the
benchmarks ended in the red. The loss came after markets
registered one of their best weekly gains last week. President
Barack Obama's meeting with top U.S. leaders that hinted at
"constructive" developments regarding the "fiscal cliff" had
lifted the mood last week. Few positive domestic and
international economic reports also pushed the benchmarks higher
in the previous week.
Coming to Monday's developments, investors were apprehensive
ahead of this week's meeting about the fiscal cliff dilemma.
President Barack Obama will meet with business leaders on
Wednesday to discuss the issue. According to experts, investors
will keep their focus on the fiscal cliff discussion and will
hope for advances in the negotiation process. Speaker of the
House of Representatives John Boehner said: "People in both
parties agree we need a 'balanced approach' to deal with our
deficit and debt and help our economy create jobs".
According to the White House, consumer spending may decline by
$200 billion if an automatic federal tax increase, which is
slated to take its effect from the beginning of 2013, is not
resolved by Congress. This may affect the remaining holiday
season also. According to a report released by the White House on
Monday, if Congress fails to resolve the fiscal cliff, then an
increase in tax rates for middle income Americans will reduce
consumer spending by 1.7%. Additionally, economic growth will
decline by 1.4% in 2013.
Separately, the National Retail Federation reported that U.S.
retailers posted sales worth $59.1 billion during the four-day
holiday weekend. Retail sales have increased by 12.8% from the
previous year. According to experts, retail sales have increased
but big retailers are offering heavy discounts, which is a matter
The Consumer Discretionary SPDR (XLY) fell 0.4% on Monday.
Stocks such as Target Corporation (NYSE:
), Costco Wholesale Corporation (NASDAQ:
), Wal-Mart Stores, Inc. (NYSE:
), Macy's, Inc. (NYSE:
) and Saks Inc (NYSE:
) plunged 2.6%, 1.7%, 0.4%, 4.5% and 2.8%, respectively.
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On the international front, Euro zone finance ministers,
International Monetary Fund and the European Central Bank were
scheduled to meet in Brussels on Monday to discuss Greece's debt
crisis. Investors eagerly await the outcome of the meeting as the
international lenders had failed to reach any conclusion in the
previous two meetings.
The utilities sector was the major gainer and the Utilities SPDR
(XLU) gained 1.3%. Stock such as Exelon Corporation (NYSE:
), Public Service Enterprise Group Inc. (NYSE:
), NextEra Energy, Inc. (NYSE:
), Dominion Resources, Inc. (NYSE:
) and FirstEnergy Corp. (NYSE:
) surged 2.6%, 1.6%, 1.1%, 1.1% and 1.7%, respectively.