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Stock Market News for December 8, 2011 - Market News

Hopes of a resolution to the long-running European debt crisis following the European Summit kept the markets modestly buoyant yesterday. However, with the volumes chart displaying a comparatively lesser reading, investors fretted about the actual outcome of the summit and waited to see if euro-zone members will cast their vote in favor of fiscal measures proposed by France and Germany on Friday.

The Dow Jones Industrial Average (DJIA) moved up 0.4% and settled at 12,196.37. The Standard & Poor 500 (S&P 500) edged up modestly by 0.2% to finish the day at 1,261.01. However, the Nasdaq Composite Index slipped 0.01% to end almost flat at 2,649.21. The fear-gauge CBOE Volatility Index (VIX) inched up yet again to hover below 29. On the past few occasions, the fear-gauge index has been creeping up at a slow pace, gradually nearing the key level of 30.

Volumes were low on a day when investor sentiment was mostly buoyed by hopes even though there was a sense of ambiguity over would be the final outcome of the European Summit. Consolidated volumes on the New York Stock Exchange, Amex and Nasdaq, were 7 billion shares, lower than the daily average of 7.95 billion shares. Advancing stocks moved past the decliners as for 51% stocks that advanced on the NYSE, 45% stocks closed in negative territory. Around 4% of the stocks finished flat.

On Thursday, the European leaders will meet in search of a definite solution to the lingering and mostly damaging European debt situation. Nations such as Greece, Ireland, Portugal, Spain have suffered from immense debt burdens and Italy with its unsustainable borrowing costs may soon be afflicted by a sovereign debt crisis. With European leaders seeking answers to the problems that have been affecting the global markets, investors decided to add stocks to their kitty hoping for a positive outcome.

The meeting that ends on Friday will also expectedly see the euro-zone members voting in favor of the strict fiscal measures that France and Germany have recommended. However, French and German leaders washed away some of the optimism as they said that as of now only a few members might get to work on lines of tight fiscal policies. It might take till Christmas, before the plan is implemented in its entirety.

On a topsy-turvy day of developments, Standard & Poor's put the European Union's 'AAA' rating on negative watch in the afternoon. That took away some of the gains before reports that the Group of 20 industrial and developing nations was planning to provide the International Monetary Fund with a package for Europe restored some optimism. However, the IMF later denied such developments and stocks partially slid yet again.

It was the financial sector that posted strong gains and the Financial Select Sector SPDR ( XLF ) fund gained 1.2%. Stocks including Bank of America Corporation (NYSE: BAC ), The Goldman Sachs Group, Inc. (NYSE: GS ), Morgan Stanley (NYSE: MS ), Wells Fargo & Company (NYSE: WFC ), JPMorgan Chase & Co. (NYSE: JPM ) and Barclays PLC (NYSE: BCS ) jumped 1.9%, 3.9%, 4.6%, 1.5%, 2.3% and 1.6%, respectively.

In a week that has been dominated by developments in Europe. On Monday, it was Standard & Poor's announcement that it will put euro-using nations, along with economies like Germany and France, under "creditwatch negative". Also on the same day, markets were boosted after German Chancellor Angela Merkel and French President Nicolas Sarkozy called for changes to the European Union treaty that would allow for stronger fiscal discipline, integration and budget alignment across the eurozone. On Tuesday, it was the Financial Times' report that suggested the Euro officials are devising a financial "bazooka." Euro-leaders were reportedly devising two bailout funds that they will put on track. In addition, it was hopes of a positive outcome from the European Summit that kept the rally intact.

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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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