Stock Market News for December 7, 2011 - Market News

After spending the day mostly in a narrow trading range, the benchmarks added small gains as hopes of a solution to the European debt crisis boosted sentiment. Investors kept their hopes alive as media reports suggested euro-leaders have been devising two bailout funds that they will put on track. However, the day was not without its concerns, as fears of European Financial Stability Facility possibly losing its credit rating deterred investors somewhat.

The Dow Jones Industrial Average (DJIA) climbed 0.4% to settle at 12150.13. The Standard & Poor 500 (S&P 500) edged up 0.1% to end almost flat at 1258.47. However, the Nasdaq Composite Index's four-day winning streak hit a roadblock and it slipped 0.2% to close at 2649.56. The fear-gauge CBOE Volatility Index (VIX) inched up to hover slightly over 28. The advancing and the declining stocks on the New York Stock Exchange were almost head to head. For 49% of the advancers, 47% of the stocks moved down. Around 3% of the stocks remained unchanged.

The Dow logged its fifth round of gains in the seven past trading sessions. Like its fellow benchmarks, the Dow traded from mixed-to-low through the day, before finally it chalked up gains in the final hours. As for the 30 Dow components, 17 stocks finished in the green and 11 stocks closed in negative territory. Two stocks, namely Kraft Foods Inc. (NYSE: KFT ) and Procter & Gamble Co. (NYSE: PG ), ended flat. On a day with negligible movements, none of the components posted robust gains or sharp declines. General Electric Company (NYSE: GE ) and Pfizer Inc. (NYSE: PFE ) emerged as the winners with gains of 2.4% and 2.0%. Caterpillar Inc. (NYSE: CAT ) and JPMorgan Chase & Co. (NYSE: JPM ) had the sharpest decline among the Dow components, losing 0.9% and 0.8%, respectively.

European developments helped the markets register their negligible gains. Lingering European debt concerns had deeply dented the markets on more occasions than they have buoyed up US benchmarks. However, investors are upbeat, banking on a positive outcome to the meeting of European leaders in the latter half of the week. Following the European Summit, investors are expecting solid measures for tackling the long-running debt woes. These would be particularly pertinent to nations which are already facing a sovereign debt crisis, or those who are most likely to face one in the near term.

The day was also marked by optimism over a Financial Times report that suggested the Euro officials are devising a financial "bazooka." Officials are considering whether the current €440 billion bail-out fund could continue running when the new €500 billion European Stability Mechanism comes into force in the second half of 2012. Such a move would increase the effectiveness of the two bail-out funds which could be further boosted by support from the IMF.

The trading session might have seen a somewhat happy ending, but the session was not without the concerns which were an overhang on investor sentiment. Concerns lingered in the background, with the possibility of the European Financial Stability Facility (EFSF) losing its credit rating. This might occur if, according to Standard & Poor's (S&P's), any of the six 'AAA' rated country face a downgrade.

The S&P's threat of the EFSF downgrade comes almost immediately after the rating agency put euro nations under "creditwatch negative" on Monday. Standard & Poor's plans to conclude its review on the euro-zone ratings soon after the European Union summit meeting scheduled for the end of this week. According to the ratings agency: "The upcoming European summit provides an opportunity for policy makers to break the pattern of what we consider to have been defensive and piecemeal measures to date, overcome individual national interests and preferences, and advance a credible response to the crisis that would go far towards restoring investor confidence".

CATERPILLAR INC ( CAT ): Free Stock Analysis Report

GENL ELECTRIC ( GE ): Free Stock Analysis Report

JPMORGAN CHASE ( JPM ): Free Stock Analysis Report

KRAFT FOODS INC ( KFT ): Free Stock Analysis Report

PFIZER INC ( PFE ): Free Stock Analysis Report

PROCTER & GAMBL (PG): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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