Benchmarks slipped into the red after investors reduced their
holdings of high yielding dividend stocks. On Tuesday, major
indices gained following encouraging domestic reports. But
yesterday, the absence of any domestic reports meant investors
shifted their attention to the uncertainty surrounding the
Federal Reserve's bond purchase program. In the previous week
itself, Federal Reserve chairman Ben Bernanke raised concerns
over the program which pushed benchmark treasury yields higher.
Among the S&P 500 industry groups consumer staples, utilities
and health care sectors took a hammering yesterday.
The Dow Jones Industrial Average (DJI) lost 0.7% to close the day
at 15,302.80. The S&P 500 decreased 0.7% to finish
yesterday's trading session at 1,648.36. The tech-laden Nasdaq
Composite Index slipped 0.6% to end at 3,467.52. The fear-gauge
CBOE Volatility Index (VIX) gained 2.4% to settle at 14.83.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 6.7 billion shares, below
2013's average of 6.4 billion shares. Declining stocks
outnumbered the advancers. For the 21% that advanced, 77%
Benchmarks gains on Tuesday were nullified by yesterday's losses.
On Tuesday major indices gained after the Street received an
encouraging report on the housing sector. The report revealed
that home prices reached its highest level in the past seven
years. Till now in 2013, the Dow Jones, the S&P 500 and the
Nasdaq have gained 16.8%, 15.6% and 14.8%, respectively. A series
of domestic reports are scheduled to be released tomorrow, the
second estimate of the GDP, initial claims and pending home
But on Wednesday investors reduced their holdings of high
yielding dividend stocks which they had preferred at the
beginning of the year. This was primarily because investors
remained unsure about how long the Federal Reserve will continue
with its bond buying program. Benchmark treasury yields have
increased since the last week and touched its highest level in
more than a year. This increase occurred after Federal Reserve
Chairman Ben Bernanke provided indications that the bond buying
program would be tapered off.
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On the earnings front, Michael Kors Holdings Ltd (NYSE:
) reported its fourth quarter results. The company's earnings
came in above the Street's estimates. The company shares gained
3.2% after the announcement of its quarterly results. For the
year 2013, the company is aiming for earnings per share of $2.43
to $2.47 and revenue of $2.65 billion to $2.75 billion compared
to the Street's estimates of earnings per share of $2.45 and
revenue of $2.82 billion. The company's Chief Executive
John Idol said: "We're encouraged by our sales results to date."
Consumer staples sector was the biggest loser among the S&P
500 industry groups and the Consumer Staples Select Sect. SPDR
(XLP) lost 1.9%. Stocks such as The Procter & Gamble Company
), The Coca-Cola Company (NYSE:
), Philip Morris International Inc. (NYSE:
), Wal-Mart Stores, Inc. (NYSE:
) and CVS Caremark Corporation (NYSE:
) lost 2.4%, 2.7%, 1.2%, 1.4% and 1.6%, respectively.
Health care stocks also took beating yesterday and the Health
Care SPDR (XLV) lost 1.6%. Stocks such as Johnson & Johnson
), Eli Lilly & Co. (NYSE:
), GlaxoSmithKline plc (NYSE:
), Abbott Laboratories (NYSE:
) and Merck & Co., Inc. (NYSE:
) decreased 2.2%, 1.5%, 3.0%, 2.2% and 1.6%, respectively.