Stocks Slumped on EU Jitters (AAPL, AGU, BAC, BRCM, CAT, CVX, FSLR, FTR, JOY, JPM, MOS, NEM, TSO, UAL)

Published on Wednesday, 14 December 2011 18:48 Written by Christopher Lynn

New York, December 14^th (TradersHuddle.com) – Stocks tumbled amid worries over the European debt crisis, which spurred a drop in the euro and a sell off in the commodities space, with both crude oil and metal prices getting hit hard. Speculation over a possible downgrade to France’s AAA credit rating coupled with the lacked of news flow from the U.S. weighed on trade, sending shares lower for the third straight session.

The Dow Jones Industrial Average lost 131.46 points, or 1.1%. The S&P 500 index fell 13.91 points, or 1.13%, while the NASDAQ tumbled 39.96 points, or 1.55%.

The market started with modest losses amid a slump in the euro, which traded below the key $1.30 level versus the Dollar and after Italian 5-year yields surged to a new euro era high following a weak auction. Speculation over a possible downgrade to France’s credit rating made the rounds around the trading desks

In Europe, equity markets closed at 2-week lows after losses accelerated through the session amid speculation of the possible downgrade to France’s AAA credit rating and as the euro continued to weaken below key levels on concern the euro zone debt crisis will impact growth in the region and globally. Sentiment in Europe was bearish following also comments from the Fed yesterday, which failed to provide a hint of further easing, while saying that downside risks remain elevated due to the debt crisis in Europe. A weak Italian 5-year debt auction added to woes.

There was an attempt to pare losses, with financials turning positive in the session, but the sharp drops in the commodity space, coupled with participants growing weary of the lack of progress by Europe's leaders in restoring economic and financial conditions in euro zone, which in turn provided an environment for ongoing rumors regarding debt downgrades in the region, weighed heavily on sentiment.

All of the S&P 500 select sectors closed in negative territory, with energy, technology, and materials underperforming the broad market index, while healthcare and financials posted the smallest declines The Energy Sector SPDR ETF (NYSE:XLE) slumped 2.8% amid a plunge in crude oil.

Chevron (NYSE:CVX), the second largest U.S. energy producer, tumbled 2.98% to $100.53, while it posted the second biggest percentage decline in the Dow Jones Industrial average. Chevron declined after crude oil was pressured by a slumping euro and by news that OPEC set a production target inline with current production, without clear mechanism to defend pricing levels. The fuel tumbled more than 5%, breaking below key technical levels and settling pit trade at $94.95 per barrel. A weak weekly inventory reading also weighed on the prices.

Denbury Resources (NYSE:DNR), the Gulf Coast operator of oil and natural gas properties, was the worst performer in the sector, with shares tumbling 6.65% to $14.32. The stock has broken calculated support at $15.95 earlier in the week. On the flip side, Tesoro (NYSE:TSO), the crude oil refiner based in San Antonio, TX, buckled the trend, closing with a gain of 1.25%, closing at $21.83.

Materials were also weaker on Dollar strength. Metal prices were crumbled, with precious metals also seeing outsize losses. Gold futures tumbled more than 4%, closing below its 200day moving average for the first time since 2009, while silver plunged 7.6% to $28.86 per ounce. Copper was also dropped close to 5%.

In the miner space, Newmont Mining (NYSE:NEM), the largest gold producer, lost 2.42% to $61.62 after trading as low as $60.84 on the lower prices for the bullion. And Pan American Silver (NASDAQ:PAAS) tumbled 5.81% to $22.53 after trading at a new yearly low of $22.22, following the plunge in silver prices.

In the AG space, Agrium (NYSE:AGU) was fell 1.04% to $64.49, slightly better than the broad market decline. The board of Directors approved quadrupling its semiannual cash divided to $0.225 per share. The company’s Board also approved a substantial Potash expansion to increase annual production capacity by approximately 50%, bringing total annual nameplate capacity to three million tons. Rival Mosaic (NYSE:MOS) was the worst performer in the sector, tumbling 4.3% to $47.36. Mosaic closed below calculated support at $49.25.

Technology weighed on the NASDAQ and the broad market due to its weighing. First Solar (NASDAQ:FSLR), the largest maker of thin film solar modules in the world, plunged to the bottom of the S&P 500 after it lowered its sales guidance for 2011 and issued 2012 guidance below consensus. The stock tumbled 21.42% to $33.45 after trading as low as $33.08, a new multiyear low. The company said that continued delays of certain projects in First Solar’s systems business due to weather and other factors was impacting its 2011 results, while the challenging environment in the industry was forcing the company to cut its 2012 guidance below analysts’ expectations.

Apple (NASDAQ:AAPL) fell 2.22% to $380.19, closing below its 20day moving average at $386.76 and logging a new low for the month of $377.68. The stock closed below its 50day moving average in the prior week, leaving the stock open for further weakness. Recently, brokerage houses had reiterated their ratings and target prices, citing iPhone 4S strong demand and a possible launch of the iPad 3 in the first quarter next year; however concern over retail sales not being as strong as expected, coupled with worries over global growth weighed on sentiment. Earlier in the week, Bernstein reiterated Apple as its Top Pick with a target price of $575, saying the market has been overly pessimistic on the stock in the recent weeks. And Ticonderoga said that Apple had its best November on record, according to its internal sales barometer. The firm said sales in November jumped 17% month over month. The stock has calculated support at $363.32 and resistance at $396.41.

Also in the sector, Frontier Communications (NYSE:FTR), the Connecticut based rural and small to medium cities telecommunications provider, lost 2.40% to $4.87 after trading as low as $4.84, a new yearly low. Last moth, Jefferies initiated the stock with a Buy and a target price of $7.

On the flip side in the sector, Broadcom (NASDAQ:BRCM) gained 0.92% to $28.45, after trading as high as $30.17. The stock traded as low as $28.19, near its 52-week low of $28.05. The company said that it sees fourth quarter revenue at the high end of the prior guidance, which would be above consensus. The company sees revenues of $1.8 billion versus consensus of $1.74 billion.

In the industrial sector, Joy Global (NYSE:JOY), the underground and surface mining equipment maker, plunged 10.77% to $75.44, posting one of the biggest declines in the broad market index. Joy disappointed with its quarterly results of EPS of $1.82 and inline revenues, while issuing cautious 2012 guidance that was inline with consensus. Meanwhile, rival, Caterpillar (NYSE:CAT) tumbled 4.37% to $87 amid weakness in the commodities space and the disappointing Joy Global news. The company said it would sell a part of its Bucyrus distribution business to the industrial division of Malaysia's Sime Darby for about $360 million. Caterpillar ended November with a gain of 3.62%, but it has turned negative for the year, with the stock losing 7.1% year to date.

Financials were not able to hold to gains after the sector attempted to post gains in the session, but ended 0.4% lower. JPMorgan (NYSE:JPM) turned higher, climbing 0.70% to $31.51, posting one of the biggest percentage gainers in the Dow. Meanwhile, Bank of America (NYSE:BAC), the largest U.S. lender, fell 1.7% to $5.23 after trading as low as $5.20, a new December low. The stock broke below calculated support at $5.53 earlier in the week and might be pushed by traders to test its multiyear low of $5.03 that was just logged two weeks ago.

Elsewhere, airline stocks benefited from the drop in crude oil. United Continental Holdings (NYSE:UAL), the owner of the world’s largest airline, gained 1.38% to $19.83 after trading as high as $20.15. Year to date, the stock has tumbled 16.75%.