Stock Market News for February 08, 2016

Benchmarks ended in the red amid a sharp fall in technology stocks on Friday. Tech shares dropped after LinkedIn released poor guidance numbers which in turn had a broad-based impact on key indexes. Drop in the shares of the FANG (Facebook, Amazon, Alphabet and Netflix) also weighed on the tech-based index, Nasdaq. Additionally, mixed U.S. jobs data and continued plunge in oil prices dragged the benchmarks southward. The Nasdaq declined to its lowest level since 2014. The S&P 500, Dow and Nasdaq registered their biggest weekly decline in four weeks.

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The Dow Jones Industrial Average (DJI) declined 1.3% or 211.61 points, to close at 16,204.97. The Standard & Poor's 500 (S&P 500) decreased nearly 1.9% to close at 1,880.05. The tech-laden Nasdaq Composite Index closed at 4,363.14, falling almost 3.3%. The fear-gauge CBOE Volatility Index (VIX) increased 7.1%, to settle at 23.38. A total of around 9.4 billion shares were traded on Friday, in line with the last 20-session average. Decliners outpaced advancing stocks on the NYSE. For 75% stocks that declined, only 23% advanced.

Shares of LinkedIn Corp ( LNKD ) fell 43.6%, its highest decline ever after releasing weak 2016 guidance. For the first quarter, the company expects revenues around $820 million, much lower than the Zacks Consensus Estimate of $868 million. The company expects full-year revenues in the range of $3.60 billion to $3.65 billion. This is lower than the Zacks Consensus Estimate of $3.920 billion.

LinkedIn's weak outlook had a negative impact on technology shares. The Technology Select Sector SPDR ETF (XLK) dropped 2.8% and was the second biggest loser among the S&P 500 sectors. Key stocks from the sector including Apple Inc. ( AAPL ), Microsoft Corporation ( MSFT ), Facebook, Inc. ( FB ) and Alphabet Inc. ( GOOGL ) decreased 2.7%, 3.5%, 5.8% and 3.6% respectively.

Separately, Hanesbrands Inc.'s ( HBI )lower-than-expected earnings results weighed on consumer discretionary stocks. Hanesbrands was the biggest decliner among S&P 500 components. Fourth-quarter earnings per share of 44 cents missed the Zacks Consensus Estimate of 46 cents. Also, the quarterly revenues slipped 7.4% to $1.4 billion, and missed the Zacks Consensus Estimate of $1.5 billion. Shares of Hanesbrands fell 15.1% following the release of earnings numbers.

The Consumer Discretionary Select Sector SPDR (XLY) declined 3.2%, emerging as the biggest decliner among the S&P 500 sectors. Its key components, including Netflix, Inc. ( NFLX ),, Inc. ( AMZN ), The Walt Disney Company ( DIS ), The Home Depot, Inc. ( HD ) and McDonald's Corp. ( MCD ) decreased 7.7%, 6.4%, 1.6%, 3.9% and 4.4% respectively.

Meanwhile, a mixed job reports hurt investor sentiment and raised concerns about a possible Fed rate hike this year. According to the Bureau of Labor Statistics (BLS), the U.S. economy generated a total of 151,000 jobs in January, missing the consensus estimate of 195,000. The tally was also significantly lower than December's job number of 262,000. However, the unemployment rate declined from 5% in December to 4.9% in January, the lowest level witnessed since 2008. The jobless rate was also lower than the consensus estimate of 5%.

Moreover, average hourly earnings gained almost 0.5% in January from previous month's figure to $25.39 per hour, higher than the consensus estimate of a 0.3% rise. Average hourly earnings witnessed a 2.5% rise from the year-ago figure.

Separately, concerns regarding oversupply and reduced possibilities of any production cuts continued to weigh on oil prices. While, the WTI crude slumped 2.7% to $30.89 per barrel, Brent crude fell 1.2% to $34.06 a barrel.

For the week, the Dow, the S&P 500 and the Nasdaq declined 1.6%, 3.1% and 5.4% respectively. Markets ended the week in the red following significant decline in some of the key sectors, continued plunge in oil prices and weak economic data.

Worse-than-expected manufacturing, services, construction spending and factory order data affected the key indexes. Further, gradual decline in possibilities of production cuts by major oil producers dragged down energy shares and eventually the broader markets.

Meanwhile, discouraging quarterly earnings results from major companies including Yahoo! Inc. ( YHOO ), Exxon Mobil Corporation ( XOM ), Ralph Lauren Corporation ( RL ) and ConocoPhillips ( COP ) dampened the investor sentiment further.

However, strong earnings report from Aetna Inc. ( AET ), Alphabet Inc. ( GOOGL ) and Comcast Corporation ( CMCSA ) had a positive impact on benchmarks. Additionally, a weak dollar boosted material and industrials sectors, the two key S&P 500 sectors which ended in the green for the week.

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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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