A drop in oil prices and lower factory activity in New York
partially weighed down sentiment, dragging benchmarks into the red.
In addition, investors opted to pause following the benchmarks'
four-day winning run, during which they touched new multi-year
highs. Separately, record-setting pre-order sales of iPhone5
boosted Apple's shares to a new all time high.
The Dow Jones Industrial Average (DJI) dropped 0.3% to close the
day at 13,553.10. The Standard & Poor 500 (S&P 500)
finished yesterday's trading session 0.3% lower at 1,461.19. The
tech-laden Nasdaq Composite Index slipped 0.2% to end at 3,178.67.
The fear-gauge CBOE Volatility Index (VIX) added a mere 0.6% to
settle just 0.08 point higher at 14.59. Consolidated volumes on the
New York Stock Exchange, the Nasdaq and the American Stock Exchange
were roughly 5.64 billion shares, lower than the year-to-date daily
average of 6.54 billion. Declining stocks outpaced the advancers on
the NYSE by a 2:1 ratio.
Volumes were lower than average following two back-to-back days
of strong volumes. While some observers said the Jewish New Year
was the primary reason, low volumes also had a lot to do with the
investors opting to pause following the strong uptrend for four
consecutive days last week. Benchmarks enjoyed robust gains during
these four days and that led to benchmarks achieving new multi-year
highs on Friday.
It was the Street's expectations for a favorable announcement
from the Fed and German a court's key decision allowing the nation
to ratify the Euro zone's rescue fund that kick-started the
four-day rally. Over the next days, both these developments made
their presence felt and benchmarks soared. Most importantly, The
U.S. Federal Reserve announced a third round of quantitative easing
(QE3). The announcement about QE3 came after months of
anticipation. Moreover, the central bank did not restrict the
purchase of mortgage debt within a specific time frame. The Fed
announced that it will buy back mortgage-backed securities worth
$40 billion every month till labor conditions improve.
However, benchmarks shied away from gains yesterday owing to a
couple of dismal factors and investors chose to hold onto their
bets. Rumors that crude oil would be released from the US'
Strategic Petroleum Reserves dragged oil prices sharply lower.
According to reports, a computer trading glitch also dented crude
prices and resulted in a sharp increase in volumes. In only three
minutes of trading, Brent crude oil slumped to $111.60 a barrel
from $115.20 a barrel. However, it finally settled at $113.79 per
barrel. U.S. light, sweet crude also dropped $2.38 to finish at
$96.62 per barrel.
Following the slump in crude oil prices, energy shares were
badly affected and the Energy Select Sector SPDR (XLE) dropped
0.8%. As for the shares, BP plc (NYSE:
), Exxon Mobil Corporation (NYSE:
), Total SA (NYSE:
), Western Refining, Inc. (NYSE:
), Valero Energy Corporation (NYSE:
), Marathon Oil Corporation (NYSE:
), Halliburton Company (NYSE:
) and Schlumberger Limited (NYSE:
) plunged 1.4%, 0.4%, 1.0%, 2.8%, 5.1%, 0.9%, 0.6% and 0.6%,
Moreover, factory activity in New York was reported to have
dropped for the second consecutive month. According to the
September Empire State Manufacturing Survey by the Federal Reserve
Bank of New York, the general business conditions index dropped
five points to a negative 10.4 and the new orders index slumped
nine points to negative 14.0. General business conditions were also
sharply lower than consensus estimates for a positive reading of
On the other hand, pre-orders for iPhone 5 set a new record by
touching 2 million units in 24 hours. Its predecessor, iPhone 4S
had attracted 1 million orders in the first 24 hours of its
release. The record-setting orders numbers helped the shares of the
tech-bellwether Apple Inc. (NASDAQ:
) to touch a new all-time high. The company's shares closed 1.2%
higher at $699.78 a share.
APPLE INC (AAPL): Free Stock Analysis Report
BP PLC (BP): Free Stock Analysis Report
HALLIBURTON CO (HAL): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
SCHLUMBERGER LT (SLB): Free Stock Analysis
TOTAL FINA SA (TOT): Free Stock Analysis Report
VALERO ENERGY (VLO): Free Stock Analysis Report
WESTERN REFING (WNR): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
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