U.S. Stock Markets
U.S. stocks eased lower Friday, capping the Dow Jones Industrial Average's worst Thanksgiving week performance since markets began observing the holiday in 1942.
The Dow lost 25.77 points, or 0.23%, to 11231.78 in a shortened session, and finished the week down 4.8%. Increasing sovereign-debt worries in Europe and the U.S. supercommittee's failure to reduce the deficit were the main drivers for the week's downdraft. The Dow has lost 7.6% over the last two weeks and finished at its lowest level since Oct. 7. It is down 3% for the year.
The Standard & Poor's 500-stock index dropped 3.12 points, or 0.27%, to 1158.67. It has registered seven straight days of declines, falling 7.9% during the streak. The Nasdaq Composite fell 18.57 points, or 0.75%, to 2441.51. The technology-oriented index notched its fourth straight weekly decline, dropping 11% throughout the skid. Trading volume was thin due to the Thanksgiving holiday, with markets closing early.
Belgium became the latest worry for investors after Standard & Poor's Ratings Services Friday downgraded the country due to renewed funding and market risk pressures. Meanwhile, Italian bond yields climbed following a weak auction of short-term bills.
Additionally, Fitch Ratings on Thursday downgraded Portugal's debt to junk and warned that additional downgrades were possible. Investors found some solace after a meeting of leaders from the euro zone's three largest economies failed to produce any additional negative news.
On Thursday, leaders of Germany, Spain and Italy pledged to propose modifications to European Union treaties that would aim to further integrate economic policy. Shares of Wal-Mart Stores rose 25 cents, or 0.4%, to 56.89, while Macy's fell 11 cents, or 0.4%, to 29.45. Best Buy declined 8 cents, or 0.3%, to 25.63. AT&T edged down 14 cents, or 0.5%, to 27.41. The blue-chip telecommunications company said it would set aside $4 billion in the fourth-quarter to cover potential costs if its planned $39 billion acquisition of T-Mobile USA were to fall apart.
The pan-European Stoxx Europe 600 index rose Friday, breaking a six-session losing streak, but still dropped 4.6% for the week, which was marked by an escalation in the sovereign debt crisis. The index gained 0.7% Friday to end at 221.54. It had fallen 7.2% over the previous six trading sessions. The French CAC 40 index rose 1.2% to 2,856.97, with oil major Total SA up 2.4%. Shares of AXA SA rose 1.7% after Goldman Sachs lifted its rating on the insurer to buy from neutral.
In Germany, the DAX 30 index jumped 1.2% to 5,492.87, with Commerzbank AG up 2.9% and chemical group BASF SE up 1.7%. U.S. stocks were also higher by the close of European trade amid hopes consumers will shake off the economic gloom and shop on what's traditionally been the biggest day of the year for U.S. retailers. That helped take the sting out of bleak news that continued to spill out of Europe Friday.
Italy sold EUR8 billion of six-month bills, but at a yield of 6.504%, a euro-era high. Italy's FTSE MIB stock index eked out a gain of 0.1% to 13,937.40, with aerospace and defense group Finmeccanica SpA up 3.5%. Shares of Prysmian SpA sank 4.7% after UBS cut the cable maker to neutral from buy, saying the valuation isn't enough for investors to ignore broader economic woes. A host of Italian bank shares also fell, with Banca Monte dei Paschi di Siena SpA off 1.9% and Banco Popolare SC down 2.4%.
Markets had been pressured by disappointment over a meeting of German, French and Italian leaders Thursday that produced no clear solutions to the crisis in the euro zone. German Chancellor Angela Merkel again criticized those calling for the issuance of euro bonds, while French President Nicolas Sarkozy said the leaders had agreed not to put additional pressure on the European Central Bank.
The Standard & Poor's 500 closed on Wednesday at 1,161.7. The U.K.'s FTSE 100 index rose 0.7% to 5,164.65, snapping a nine-session losing streak. Bank shares posted particularly strong gains, with Royal Bank of Scotland Group PLC up 4.3% and Lloyds Banking Group PLC up 3.5%. Shares of Barclays PLC rose 2.1%.
Asian markets closed mostly lower Friday, with energy and banking stocks notable decliners, as ongoing concerns over Europe's debt crisis kept investors sidelined. Hong Kong's Hang Seng Index fell 1.4% to 17689.48, South Korea's Kospi declined 1% to 1776.40 and China's Shanghai Composite Index slipped 0.7% to 2380.22.
India's Sensex fell 1% to 15695.43. Japan's Nikkei Stock Average traded nearly flat, ending down 0.1% at 8160.01, its lowest closing level in nearly 32 months. Energy and financial stocks were among the worst performers. Hong Kong-listed Cnooc dropped 1.8%.
In the financial sector, China Merchants Bank fell 2.6% and Bank of Communications lost 2% in Hong Kong, while Tokyo-listed Shinsei Bank fell 5.2%. Property stocks also dragged in Hong Kong, with China Resources Land down 2.8% and Sino Land losing 2.6%. But gains in some exporters limited losses in a choppy Tokyo session, with the dollar trading over Y77. Canon added 2%, Toyota Motor rose 1.6% and Fujifilm Holdings gained 1%. Shares in Olympus surged 8.6% on hopes for managerial reforms. South Korean exporters didn't fare as well, with Kia Motors down 4.6% and Hyundai Motor off 3.2%.
Base metals pared early losses to close mixed on the London Metal Exchange Friday amid quiet trading conditions and persistent concerns over the fate of the euro zone. At the close, LME three-month copper was down 0.5% on the day at $7,230, above Thursday's one-month low of $7,100.25/ton. While zinc gained 1.1% to close at $1,909/ton, aluminum lagged the complex, closing 1.4% lower at $1991/ton.
Although the reopening of U.S. markets after the Thanksgiving break provided a little lift for the base metals later in the European day, gains were muted as jitters over the euro zone's sovereign debt crisis persisted. Oil prices see-sawed Friday before finishing the day largely even, falling on worries about European debt but rising with U.S. equities. Fewer than 300,000 contracts were traded, less than half of normal levels, as many traders took the post-Thanksgiving day off, and the market closed an hour earlier than normal.
Light, sweet crude futures for January delivery ended the day up 60 cents, or 0.6%, at $96.77 a barrel on the New York Mercantile Exchange. Brent crude on the ICE Futures Europe exchange ended down $1.12, or 1%, at $106.64 a barrel. A fresh set of European credit-rating downgrades sent investors seeking safety in the dollar, pushing gold futures lower for the third time in four sessions.
The most actively traded gold contract, for December delivery, fell $10.20, or 0.6%, to settle at $1,685.70 a troy ounce on the Comex division of the New York Mercantile Exchange. On the week, futures fell 2.3%, dropping below $1,700 for the first time since late October as investors moved to cash on concerns that Europe was sliding toward a credit crunch.
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