Benchmarks declined for the second consecutive day as
investors remained worried about whether the "fiscal cliff"
dilemma would be resolved at the right time. Meanwhile, the
number of Americans filing for the unemployment benefits declined
during the previous week. Separately, the U.S. trade deficit
decreased to its lowest level in nearly two years as exports
increased to a record high. European Central Bank (ECB) President
Mario Draghi said financial market sentiment has improved a bit,
but the European economic outlook remains dull. The energy sector
was the major loser among the S&P 500 industry groups.
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The Dow Jones Industrial Average (DJI) tumbled 0.9% to close the
day at 12,811.32. The Standard & Poor 500 (S&P 500)
slumped 1.2% to finish yesterday's trading session at 1,377.51.
The tech-laden Nasdaq Composite Index fell 1.4% to end at
2,895.58. The fear-gauge CBOE Volatility Index (VIX) tumbled 3.1%
to settle at 18.49. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 6.9
billion shares, higher than the daily average of 6.52 billion
shares. Declining stocks easily outpaced the advancers on the
NYSE; as for 71% stocks that fell, only 26% stocks moved higher.
The Dow had surged as much as 48 points, boosted by couple of
encouraging domestic reports in the initial hours. However, the
Dow started to fall soon after and shed as much as 73 points in
the last 40 minutes of trading. Including yesterday's decline,
the S&P 500 has tumbled 6% after touching a 52-week high on
Concerns about chances of the "fiscal cliff" not being resolved
in time hit markets for the second day in a row. Worries over the
fiscal cliff may influence investors in the coming weeks
according to market experts. The debate over this issue will
intensify during next year's budget session. According to the
Congress Budget Office, if Congress fails to solve the problem in
time then there might be a recession in 2013 and GDP will fall by
According to a statement made by White House: "The President will
deliver a statement in the East Room about the action we need to
take to keep our economy growing and reduce our deficit".
Meanwhile, the U.S. Department of Labor released its initial
claims report, which revealed that the number of Americans filing
for unemployment benefits has decreased from the previous week.
The report stated that the advance figure for seasonally adjusted
initial claims decreased by 8000 to 355,000 for the week ending
November 3 from the prior week's unrevised figure of 363,000.
This was below consensus estimates of 365,000.
Separately, the September trade deficit has decreased to $41.5
billion from the revised August figure of $43.8 billion. This was
below consensus estimates of $44.9 billion. According to the U.S.
Census Bureau and the U.S. Bureau of Economic Analysis,
September, exports were recorded at $187.0 billion, whereas
imports were $228.5 billion. September exports increased by $5.6
billion from August, while imports increased by $3.4 billion.
On the international front, European Central Bank (ECB) President
Mario Draghi said that the sentiment of European financial
markets has improved marginally but the Euro zone continues to
struggle with the debt crisis. He also said that: "Unemployment
is deplorably high. Overall economic activity is weak and it is
expected to remain weak in the near term." However, he also spoke
of certain encouraging signs for the European markets and said:
"There has been a return of flows from the rest of the world, in
particularly U.S. money-market funds."
The energy sector was the major loser among the S&P 500
industry groups and the Energy Select Sector SPDR (XLE) lost
1.8%. Stocks such as Exxon Mobil Corporation (NYSE:
), Chevron Corporation (NYSE:
), Marathon Oil Corporation (NYSE:
), Petroleo Brasileiro Petrobras SA (NYSE:
) and TOTAL S.A. (NYSE:
) tumbled 1.3%, 1.5%, 0.3%, 3.0% and 1.8%, respectively.