Benchmarks lost out on their their initial gains to close in the
red following comments made by a key Fed official. The
official said the central bank's bond buying program will not be
effective enough to accelerate growth or improve the employment
scenario. The S&P 500 and Nasdaq suffered their biggest
percentage fall since 25th June and 20th July, respectively.
The Dow Jones Industrial Average (DJI) slipped 0.7% and ended at
13,457.55. The Standard & Poor 500 (S&P 500) lost 1.1% to
close at 1,441.59. The tech-laden Nasdaq Composite shed 1.4% and
finished yesterday's trading session at 3,117.73. The fear-gauge
CBOE Volatility Index (VIX) was up 9.1% and settled at 15.43.
Consolidated volumes on the New York Stock Exchange, American Stock
Exchange and the Nasdaq were roughly 6.75 billion shares, higher
than the year-to-date average of 6.54 billion shares. Declining
stocks outpaced the advancers on the NYSE; as for 71% stocks that
dropped, 27% stocks moved higher.
Charles Plosser, President of the Federal Reserve Bank of
Philadelphia, said the Fed's recent initiation of a bond buying
program will not accelerate growth or improve the existing labor
market conditions. He further added that this program would
probably endanger the central bank's credibility. Plosser's
comments were in sharp contrast to San Francisco Fed President John
William's comments on Monday that the central bank could expand the
bond-buying program to reduce the unemployment rate more
Separately, encouraging consumer confidence and home prices data
failed to prevent the benchmarks from closing in the red. The
Conference Board reported that the Consumer Confidence Index rose
from 61.3 in August to 70.3 in August. This comes after a fall in
August and also surpasses consensus estimates of a reading of 63.1.
It is also the highest jump in the last seven months. Lynn Franco,
the Director of Economic Indicators at The Conference Board, said:
"Consumers were more positive in their assessment of current
conditions, in particular the job market, and considerably more
optimistic about the short-term outlook for business conditions,
employment and their financial situation". Moreover, the
Expectations Index increased from 71.1 to 83.7 and the Present
Situation Index rose from 46.5 to 50.2.
The Standard & Poor's/Case-Shiller home price data for July
was also released yesterday. According to the report, the
S&P/Case-Shiller 20-city composite index and 10-city composite
index registered a month-on-month gain of 1.6% and 1.5%,
respectively. Both these composites recorded their third straight
month of gains in July.
Despite encouraging housing data, the sector suffered a decline
yesterday. The SPDR S&P Homebuilders (XHB) lost 1.7% and stocks
including Standard Pacific Corp. (NYSE:
), Lennar Corporation (NYSE:
), KB Home (NYSE:
), D.R. Horton, Inc. (NYSE:
) and Meritage Homes Corporation (NYSE:
) plunged 3.8%, 1.9%, 1.5%, 1.3% and 1.3%, respectively.
Meanwhile, shares of Caterpillar Inc. (NYSE:
) fell for the second day after it lowered its earnings forecast
for 2015 on Monday. Shares of the world's largest construction
equipment manufacturer dropped 4.2% and ended at $87.01. Last week,
FedEx Corporation (NYSE:
) reduced its second quarter earnings estimates and Norfolk
Southern Corp. (NYSE:
) reduced estimates for the third quarter.
The Technology Select Sector SPDR (XLK) also dipped 1.4%
following the second day of declines for shares for Apple Inc.
) as concerns arose about whether the company can produce and
supply sufficient quantities of its iPhone 5 to meet the huge
demand in time. The company's shares lost 2.5% and closed at
$673.54. Other stocks including Oracle Corporation (NASDAQ:
), QUALCOMM, Inc. (NASDAQ:
), Microsoft Corporation (NASDAQ:
), Cisco Systems, Inc. (NASDAQ:
) and Verizon Communications Inc. (NYSE:
) lost 2.9%, 1.5%, 1.3%, 0.7% and 0.1%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
CATERPILLAR INC (CAT): Free Stock Analysis
CISCO SYSTEMS (CSCO): Free Stock Analysis
D R HORTON INC (DHI): Free Stock Analysis
FEDEX CORP (FDX): Free Stock Analysis Report
KB HOME (KBH): Free Stock Analysis Report
LENNAR CORP -A (LEN): Free Stock Analysis
MICROSOFT CORP (MSFT): Free Stock Analysis
MERITAGE HOMES (MTH): Free Stock Analysis
NORFOLK SOUTHRN (NSC): Free Stock Analysis
ORACLE CORP (ORCL): Free Stock Analysis Report
QUALCOMM INC (QCOM): Free Stock Analysis Report
STANDARD PAC (SPF): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
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