Stocks Selloff Amid Global Fears
Published on Tuesday, 10 April 2012 17:30 Written by Christopher Lynn
New York, April 10th (TradersHuddle.com) – Stocks ended sharply lower after the sell off accelerated ahead of a new earnings season, with stocks posting their fifth consecutive loss. The Dow skidded over 200 points, the S&P 500 broke below the key technical level of 1370, and the NASDAQ ended below the 3,000-level for the first time in 4 weeks amid worries over the health of the global economy and renewed fears over the debt levels in the euro zone.
The Dow Jones Industrial Average lost 213.35 points, or 1.65%. The S&P 500 index slumped 23.60 points, or 1.71%, while the NASDAQ tumbled 55.86 points, or 1.86%.
The market started near the neutral line after futures held relatively well in pre-market amid mild weakness from a mixed overnight performance in overseas markets with participants focusing on the upcoming earnings season. Europe was in catching up mode after the Easter break and Asia saw mixed trade on concern over weaker than expected trade data in China, as imports were weaker than expected.
However, stocks saw increased selling pressure mid morning, with the major benchmark indices turning significantly lower as investors remained on edged amid growing doubts on the strength of the global economy and as higher bond yields in Spain and Italy pressured European equities and weighed on market sentiment.
The decline was broad based with all of the S&P 500 ending deep in negative territory. Consumer discretionary, financials, materials, and industrials lost more than 2%, while staples and healthcare logged the smallest losses.
Big drops in homebuilder stocks impacted the consumer discretionary space. Lennar (NYSE: LEN) plunged to the bottom of the S&P 500, as shares tumbled 7.27% to $24.50, closing just below both its 50day simple and exponential moving averages. Rival PulteGroup (NYSE: PHM) lost nearly 6.6% to $7.69.
Also weighing on the sector, Best Buy (NYSE: BBY), the electronics retailer, lost 5.9% to $21.32 after the resignation of Chief Executive Officer Brian Dunn. The company named Director Mike Mikan interim CEO until a permanent replacement is hired. Shares rallied more than 4.0% in initial reaction to the news, but the stock rolled over as equities turned sharply lower.
Best Buy rival Amazon (NASDAQ: AMZN) lost 2.55% to $186.98, amid the weak tape and on news that Hewlett Packard (NYSE: HPQ) will start offering cloud based computing to compete with the market offers from the likes of Apple and Amazon. HP was the only Dow component ending in positive territory, as shares gained 0.56% to $23.27.
Dell (NASDAQ: DELL) was also a notable mover in the tech space, as the stock was able to manage to close in positive territory amid the broad weakness. Dell gained 0.2% after Morgan Stanley upgraded the stock to Equal Weight.
Apple (NASDAQ: AAPL) hit another milestone as its market cap surpassed $600 billion, briefly as shares traded above $643 per share, while logging a new all-time high of $644. Apple however reversed amid the selloff ending with a 1.22% loss.
In the financial sector, banks were hit again amid worries over the global economy and European debt woes. FBR Capital raised its view on a handful of banks, but had little impact on trading. Bank of America (NYSE: BAC) tumbled 4.4% to $8.54 as the stock logged the worst percentage decline in the Dow Jones Industrial Average and as it hugged support near its 50day moving average. Rivals JPMorgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) lost more than 1.5%, as investors prepare to hear their quarterly results this next Friday.
In the materials space, Newmont Mining (NYSE: NEM) was the lonely gainer, as shares gained 2% to $48.97, supported by higher gold prices. The bullion received support from increased demand for safe haven amid a risk-off trade.
Alcoa (NYSE: AA) lost 2.9% to $9.32 ahead of its quarterly results. In after hours, Alcoa was surging 5.5% to $9.83 after beating earnings expectations by $0.13 per share and as the company reaffirmed fiscal 2012 global alumina demand outlook. The company posted adjusted earnings of $0.10 per share on revenues that climbed 0.80% from a year ago period to $6.01 billion.
Crude oil prices fell for a second day, which in turn pressured related equities in the energy sector. Refiners were among the top decliners, with Valero Energy (NYSE: VLO) posting the biggest percentage decline in the sector as shares lost 4.5% to $23.6 despite Citigroup adding the stock to its Top Picks Live List. Meanwhile, Alpha Natural Resources (NYSE: ANR) gained 1.5% to $14.27, posting the biggest gain in the sector.
Elsewhere, SUPERVALU (NYSE: SVU) surged to the top of the S&P 500 on positive reaction to its earnings results and outlook. The grocery chain operator beat earnings expectations by $0.02 per share on revenues that climbed 5% from a year ago period to $8.23 billion, just shy of consensus. Also, investors cheered upside EPS guidance for fiscal 2013.
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