Stocks Post Worst Losses for the Year on Greek Drama

Published on Friday, 10 February 2012 18:01 Written by Christopher Lynn

New York, February 10^th (TradersHuddle.com) – Stocks fell, posting their biggest single session loss of the year, as uncertainty over the Greek bailout rose amid calls for further conditions and cuts in order for the country to access new bailout funds. Both the NASDAQ and the S&P 500 snapped a five winning streak. Adding to the woes, S&P cut it’s rating on almost all of the Italian banks, citing worries over the banking industry and economic risks.

The Dow Jones Industrial Average fell 89.23 points, or 0.69%. The S&P 500 index lost 9.31 points or 0.69%, while the NASDAQ slid 23.35 points, or 0.80%.

For the week the Dow fell 0.47%, while the NASDAQ slid 0.06% and the S&P 500 lost 0.17%.

The market started with sharp losses, snapping the steady upside momentum of the entire week, as optimism towards the possibility of a Greek austerity deal waned after Greece’s creditors said that the country needs to provide further cuts and obtain parliamentary ratification in order to access a new round of financial aid. The risk aversion trade got started in Asia following China’s trade data, which showed a 15% drop in imports. The U.S. trade deficit came basically inline with expectations, increasing to $48.8 billion in December.

In Europe, equity markets fell over renewed Greek concerns after EU finance ministers said that further conditions need to be met, including a Parliamentary vote over the weekend, ratifying the new austerity measures plan amid harsh oppositions from the Greek population, which came out with strikes and violent demonstrations against the cuts. Participants cut their risk amid concern the situation in Greece could end in a messy default with ramifications to other highly leveraged euro zone countries.

Despite stocks bouncing off from the lows of the session and closing off the lows, stocks still fell for the week amid the Greek drama. All of the S&P 500 sectors closed in negative territory, with materials, energy, industrials, and financials posting the biggest declines.

The Materials SPDR ETF (NYSE: XLB) tumbled close to 2% in the day, as the euro fell below the $1.32 level. The increased worries over Greece and concern over the global economy impacted the space. Alcoa (NYSE: AA), the aluminum producer, lost more than 3%, posting the biggest percentage decline in the Dow Jones Industrial Average.

Meanwhile, steelmakers also suffered, with both AK Steel (NYSE: AKS) and United States Steel (NYSE: X) tumbling more than 5% on concerns over global demand. AK Steel was downgraded to a Neutral from Buy at Citigroup. Also weighing on the space on lower copper prices was Freeport McMoRan (NYSE: FCX). The world’s largest publicly traded copper producer lost more than 3% in the session.

In the energy sector, crude oil fell more than 1%, settling below $99 per barrel. ConocoPhillips (NYSE: COP) escape weakness in the sector, climbing almost 1% to $72.25 after Deutsche Bank upgraded the stock to a Buy from Hold. The firm raised its target price to $90 from $82, citing a compelling valuation for a post-split ConocoPhillips.

The big losses in the sector came from ancillary plays like coal stocks. Alpha Natural Resources (NYSE: ANR) with its high beta led the sector lower, as shares plunged 6% to $21.07. Alpha Natural fell on concerns over demand following Chinese trade data and jitters over the European debt crisis.

Financials saw weakness amid the turmoil in Greece and following the S&P downgrade of Italian banks. NYSE Euronext (NYSE: NYX) posted the biggest gains in the sector after the company posted better than expected earnings on revenues that were inline with consensus. NYSE Euronext jumped 4.5%, also lifting the other exchanges in the sector.

CME Group (NYSE: CME), IntercontinentalExchange (NYSE: ICE), and NASDAQ OMX (NASDAQ: NDAQ) all closed higher on the earnings news.

Banks were under pressure on European concerns a day after the landmark $26 billion settlement on foreclosure abuses. Bank of America (NYSE: BAC) fell 1.34% to $8.07, with the stock able to hold the $8 per share level, while also closing above its 200day moving average. BofA will bear $11.8 billion of the $26 billion settlement, but still managed to gain close to 3% on the week.

And the Technology SPDR ETF (NYSE: XLK), which had closed at a new 52-week high in the prior session, outperformed the broad market index. Shares fell 0.71%.

Salesforce.com (NYSE: CRM) helped the sector outperformance, jumping the most in the space, with shares gaining 2.25% in the session on reports of an order in the financial services vertical area. Visa (NYSE: V) extended its positive move from the prior session, which came after a solid earnings report and a buyback announcement. The stock gained 1.32% to $113.9 after posting a new all-time high of $114.

Apple (NASDAQ: AAPL) also defied weakness in the broad market, with shares edging a gain of 0.05% after the stock logged a new all-time high of $497.62, as participants pushed the stock towards the $500 psychological barrier. Helping the move higher was ongoing chatter over a possible Apple dividend and reports that the tech giant could launch its new iPad 3 as soon as early March.

Weighing on the sector, were shares of First Solar (NASDAQ: FSLR) and Electronic Arts (NASDAQ: EA). The solar panels maker plunged 10.4%, logging the biggest decline in the S&P 500, after it was downgraded to a Neutral at Collins Stewart. While Electronic Arts lost 2.52% to $17.42 after it was downgraded to a Neutral from Outperform at Macquarie and after research firm NPD said that sales of video games in the U.S. tumbled 34% year over year in January, with consumers purchasing more games in smartphones and or social media platforms.