Benchmarks closed in the red on Monday after the World Bank
reduced growth estimates for East Asia and the Pacific region.
Meanwhile, investors remained apprehensive ahead of the
third-quarter earnings season, which will kick off today with Alcoa
reporting its results after the closing bell. Eventually, the
cautious tone and the Columbus Day holiday led to the lightest
trading session for the year. Separately, Euro-zone finance
ministers met in Luxembourg and said that no bailout was required
for Spain.
The Dow Jones Industrial Average (DJI) lost 0.2% to close the
day at 13,583.65. The Standard & Poor 500 (S&P 500) slipped
0.4% to finish yesterday's trading session at 1,455.88. The
tech-laden Nasdaq Composite Index was down 0.8% and ended at
3,112.35. The fear-gauge CBOE Volatility Index (VIX) added 5.4% to
settle at 15.11. Consolidated volumes on the New York Stock
Exchange, American Stock Exhange and Nasdaq were roughly 4.1
billion shares, significantly lower than the year-to-date average
of 6.54 billion shares. The declining stocks outpaced the advancers
on the NYSE; as for 58% stocks that dropped, 38% stocks moved
higher. The U.S. government and bond markets remained closed for
the Columbus Day holiday, resulting in low volumes.
Markets opened following news that the World Bank has slashed
growth forecasts for East Asia and the Pacific region. The World
Bank now forecasts a growth rate of 7.2% for China and Asia-Pacific
countries, down from the 7.6% projected in May this year. Moreover,
the World Bank was bearish about China, the world's second largest
economy, and noted that the slowdown would be far worse than what
is being anticipated. The European debt crisis has hindered China's
growth story.
Meanwhile, all eyes are fixed on third-quarter corporate
earnings, which will start with Alcoa Inc (NYSE:
AA
) reporting its results after the market closes today. Markets have
enjoyed a decent run in the recent past, mostly spurred by the
announcement of the third round of quantitative easing. Benchmarks
have rallied to reach multi-year highs. However, corporate earnings
will play a crucial role this time, as they would possibly decide
whether benchmarks are able to sustain the winning momentum.
However, not many analysts are upbeat about the earnings season
this time around.
In fact, uncertainty about the upcoming earnings season
intensified after bellwethers such as FedEx Corporation (NYSE:
FDX
), Caterpillar Inc. (NYSE:
CAT
) and Hewlett-Packard Company (NYSE:
HPQ
) slashed their earnings estimates. FedEx is now expecting 2013
earning per share within the range of $6.20-$6.60, down from
$6.90-$7.40. Meanwhile, Caterpillar has revised its 2015 earning
estimates to $12 to $18 per share, down from the earlier range of
$15 to $20 a share. Hewlett-Packard is anticipating adjusted
earnings in the range of $3.40 to $3.60 per share for fiscal 2013.
The weak global economic situation has hampered the growth of these
companies.
On the international front, European finance ministers met in
Luxembourg to discuss Spain's bailout. After the meeting, Euro-zone
finance ministers said Spain's steps to overhaul its economy have
eliminated the need for any bailout at least at this point of
time.
Coming to the sectors, technology had a bad run yesterday. Tech
bellwether Apple (NASDAQ:
AAPL
) lost 2.21%. Other stocks such as Hewlett-Packard Company (NYSE:
HPQ
), Microsoft Corporation (NASDAQ:
MSFT
), Google Inc (NASDAQ:
GOOG
) and SanDisk Corporation (NASDAQ:
SNDK
) lost 1.8%, 0.2%, 1.3% and 0.8% respectively.
While most of the sectors closed in the red at the end of
yesterday's trading session, the energy sector secured a finish in
the green. Energy stocks such as Exxon Mobil Corporation (NYSE:
XOM
), Chevron Corporation (NYSE:
CVX
), BP plc (NYSE:
BP
), Statoil ASA (NYSE:
STO
) and Petroleo Brasileiro Petrobras SA (NYSE:
PBR
) gained 0.1%, 0.1%, 0.3%, 0.4% and 0.6%, respectively.
ALCOA INC (AA): Free Stock Analysis Report
ALCOA INC (AA): Free Stock Analysis Report
APPLE INC (AAPL): Free Stock Analysis Report
BP PLC (BP): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
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CHEVRON CORP (CVX): Free Stock Analysis Report
FEDEX CORP (FDX): Free Stock Analysis Report
GOOGLE INC-CL A (GOOG): Free Stock Analysis
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HEWLETT PACKARD (HPQ): Free Stock Analysis
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HEWLETT PACKARD (HPQ): Free Stock Analysis
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MICROSOFT CORP (MSFT): Free Stock Analysis
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PETROBRAS-ADR C (PBR): Free Stock Analysis
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SANDISK CORP (SNDK): Free Stock Analysis Report
STATOIL ASA-ADR (STO): Free Stock Analysis
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EXXON MOBIL CRP (XOM): Free Stock Analysis
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