Investors' skepticism about the future of the bond buying plan dragged benchmarks to the third-straight day of losses. Some weaker-than-expected earnings results also added to investors woes. On the international front, Germany's factory output in June improved at its fastest pace in past two years. Of the top 10 S&P 500 industry groups, consumer discretionary stocks suffered the most, while utilities stocks were the biggest gainers.
For a look at the issues currently facing the markets, make sure to read today's Ahead of Wall Street article.
The Dow Jones Industrial Average (DJI) lost 0.3% to close the day at 15,470.67. The S&P 500 decreased 0.4% to finish yesterday's trading session at 1,690.91. The tech-laden Nasdaq Composite Index slipped 0.3% to end at 3,654.00. The fear-gauge CBOE Volatility Index (VIX) jumped 2% to settle at 12.98. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.49 billion shares, well below than 2013's average of 6.36 billion shares. Declining stocks outnumbered the advancers. For 67% shares that declined, only 30% advanced.
Since the start of 2013, benchmarks have been driven to multiple highs on the back of the bond purchase program. However, investors have turned cautious over the uncertainty related to the timing of tapering the stimulus program. In the last FOMC meeting, it was specifically said that the tapering of bond purchase program depends heavily on the employment figures and controlling the inflation rate at 2%. Currently, neither of the indicators have met their targets. On Tuesday, comments from two Fed officials jolted the markets as they hinted at tapering the bond buying program as early as next month.
A Federal Reserve data revealed that consumer credit increased at 6% in second quarter. Within the consumer credit, revolving credit increased by 2%, while nonrevolving credit increased 7.5%. For the month of June, consumer credit increased at 6%.
On the earnings front, the Walt Disney Company (NYSE: DIS ) modestly beat the Street's earnings expectations. Revenues of the company came in at $11.58 billion, slightly higher than $11.09 billion in last year. However, the figures were below estimates. Net income came in at $1.85 billion or $1.03 a share, compared with $1.83 billion last year or $1.01 a share.
Shares of First Solar, Inc. (NASDAQ: FSLR ) plunged 13.4% after its results came in below the Street's estimates. The company's poor performance was attributable to construction lags. The company said that it is in a process to acquire General Electric Company (NYSE: GE ) cadmium telluride solar technology which will increase operating costs in future.
Separately, German economy may be finally seeing a ray of hope as its industry output moved north at the fastest pace in two years. Industrial orders grew by 2.4% from prior month and outpaced the consensus estimate of a 0.3% rise. An improvement in the consumer sentiment, expansion of private sector and decrease in unemployment indicates that the German economy is finally climbing up the growth ladder primarily.
Utilities stocks emerged as the biggest gainer. The Utilities SPDR (XLU) gained 0.5%. Stocks such as The Southern Company (NYSE: SO ), Dominion Resources, Inc. (NYSE: D ), NRG Energy Inc. (NYSE: NRG ), TECO Energy, Inc. (NYSE: TE ) and PPL Corporation (NYSE: PPL ) gained 0.9%, 0.9%, 0.3%, 0.6% and 0.7%, respectively.
Consumer discretionary stocks suffered the most. The Consumer Discretionary SPDR (XLY) lost 0.9%. Stocks such as CBS Corporation (NYSE: CBS ), Electronic Arts Inc. (NASDAQ: EA ), Time Warner Inc. (NYSE: TWX ) and Netflix, Inc. (NASDAQ: NFLX ) lost 0.7%, 0.4%, 0.4% and 2.6%, respectively.