Stock Market News for October 08, 2014 - Market News
Markets ended in the red as concerns about global growth particularly that of the Eurozone's, dented investor sentiment. Moreover, dismal earnings and sales outlooks also dragged down the benchmarks. The Dow hit the lowest level since mid-August while the S&P 500 was down 3.8% from its highest level reached on Sep 18.
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) declined 1.6%, or 272.52 points, to close at 16,719.39. The Standard & Poor 500 (S&P 500) dropped 1.5% to close at 1,935.10. The tech-laden Nasdaq Composite Index closed at 4,385.20; declining 1.6%. The fear-gauge CBOE Volatility Index (VIX) rose 11.3% to settle at 17.20. A total of 3.7 billion shares were traded on NYSE on Tuesday Decliners outpaced advancing stocks on the NYSE. For 75% stocks that declined, 22% advanced.
On Tuesday, Germany's economic ministry reported that the country's industrial production suffered 4% drop in August, its biggest fall in five and a half years. It was also wider than the consensus estimate of 1.5% decline. The rise of 1.9% in industrial production in July was also revised down to 1.6%.
It was also reported on Monday that factory orders dropped 5.7% in August, its biggest decline since 2009. Declining demand in both Eurozone and China, and tensions related to Russia-Ukraine crisis that led to sanctions have negatively impacted orders in Germany, Europe's biggest economy. Dismal economic data from Germany raised worries about third quarter growth in Euro-zone.
Moreover, the International Monetary Fund (IMF) now expects global growth to be 3.3% this year, down from previous forecast of 3.4%. IMF also reduced its guidance for next year's global growth from 4% to 3.8%. It blamed sluggish growth conditions in Japan, Latin America and Europe for lowering its guidance. However, IMF raised its guidance for growth in the U.S. economy this year to 2.2%, up from its previous forecast of 1.7%. But it also said that governments should immediately opt for effective policies in order to accelerate the pace of growth.
Meanwhile on the domestic front, some companies are reducing their third quarter earnings and sales estimates. This is due to the drop in global demand. Third quarter earnings season will kickstart today following the release of Alcoa Inc.'s ( AA ) results after the closing bell today. Shares of Christopher & Banks Corporation ( CBK ) plunged 36% after lowering its guidance for third quarter revenues from previously forecasted range of $122-124 million to $114-118 million. Christopher & Banks was the biggest percentage decliner in NYSE on Tuesday.
SodaStream International Ltd.'s ( SODA ) shares dropped 21.9% after forecasting third quarter sales of around $125 million, lower than market's expectation of $153.6 million. The company said that the drop in the US demand was the main reason behind the cut.
Shares of AGCO Corporation ( AGCO ) declined 10.6% after predicting third quarter earnings per share between 60 cents and 65 cents, below the Zacks Consensus Estimate of 82 cents.
Separately, price of WTI crude oil dropped 1.7% to $88.85 per barrel, reaching the lowest price since Apr 2013. The decline in oil price had a negative impact on the Energy Select Sector SPDR (XLE). The sector declined 1.3% on Tuesday. Key energy stocks including Chesapeake Energy Corporation ( CHK ), EOG Resources, Inc. ( EOG ), Helmerich & Payne, Inc. ( HP ) and Chevron Corporation ( CVX ) declined 1.9%, 1.6%, 2.1% and 1.8%, respectively.
The Industrial Select Sector SPDR (XLI) was the biggest loser among the S&P 500 sectors. The sector dropped 2.4% on Tuesday. Key industry stocks including The Boeing Company ( BA ), Caterpillar Inc. ( CAT ), General Electric Company ( GE ) and FedEx Corporation ( FDX ) declined 2.3%, 3.4%, 1.6% and 2%, respectively. All of S&P 500 sectors registered losses on Tuesday.
However, shares of Keurig Green Mountain, Inc. ( GMCR ) jumped 4.9% following an upgrade of its stocks on speculation that the company will witness impressive sales and earnings growth. Keurig Green Mountain was the biggest gainer among the S&P 500 companies.
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