Stocks Logged Worst Weekly Decline of the Year
Published on Friday, 13 April 2012 19:59 Written by Christopher Lynn
New York, April 13th (TradersHuddle.com) – Stocks fell sharply as selling accelerated in the final hour of trading to close at session lows. Participants reacted negatively to a weaker than expected reading on Chinese GDP and to tepid economic data in the U.S. Better than expected earnings from banking giants JPMorgan and Wells Fargo failed to provide support to a market, which logged its worst weekly performance for the year.
The Dow Jones Industrial Average lost 136.99 points, or 1.05%. The S&P 500 index fell 17.31 points or 1.25%, while the NASDAQ tumbled 44.22 points, or 1.45%.
For the week, the Dow fell 1.61%, while the NASDAQ plunged 2.25 %, and the S&P 500 tumbled 1.99%.
The market started under pressure despite better than expected results from some of the nation’s biggest banks and a handful of other reports as participants were disappointed after the Chinese economy grew 8.1%, below the 8.9% figure that was widely expected. European markets weighed despite coming off their lows, as Spanish bonds continued to put investors on edge as yields moved towards 6%, following a report that showed that the country’s banks borrowed heavily from the ECB.
The move lower accelerated with participants exiting positions ahead of the weekend and the continuation of the earnings season next week. The selloff was broad based with all of the S&P 500 Select Sectors ending in negative territory. Financials were the sector that was hit the worst, tumbling more than 2% in the session. Technology, energy, and industrials also saw heavy downward pressure, while defensive sectors like consumer staples and utilities ended near the neutral line.
Financials were under pressure amid a selloff in banking shares. JPMorgan (NYSE: JPM) tumbled 3.64% to $43.21 despite beating earnings expectations. Shares were under pressure as participants were disappointed over declines from a year ago period in net income and revenues and after CEO Jamie Dimon said that elevated mortgage-related costs and losses will likely continue for some time.
Rival Wells Fargo (NYSE: WFC) also posted better than expected quarterly results, still shares moved lower, as participants likely took some profits in the name amid uncertainty over the debt crisis in the euro zone going into the weekend. The lender posted strong mortgage banking results, but it failed to spur participants to buy the stock, which fell 3.5% in the session. Bank of America (NYSE: BAC) plunged 5.3% to $8.68, posting the biggest percentage decline in the Dow Jones Industrial Average. The stock moved closer to its 50day moving average, which will likely act as support. BofA is schedule to report its quarterly results next Thursday. For the week the stock tumbled nearly 6%.
In the technology space, Google (NASDAQ: GOOG) tumbled more than 4%, posting one of the biggest percentage declines in the sector. The company posted better than expected results and several brokerage houses boosted their price targets on the stock. However, the investment community, focusing on CPC and paid clicks, gave a tepid response. The company also announced a 2 for 1 stock split designed to maintained the founders control of the company, which is some respect might have spooked some participants.
Apple (NASDAQ: AAPL) also weighed on the performance and moved lower in the session. The stock fell 2.8% to $605.23 after the company rejecting firmly the U.S. DOJ allegations over its participation on price fixing for e-books. Apple reached an all-time high of $644, briefly surpassing the $600 billion market cap, earlier in the week to later pull back amid the antitrust suit and the market correction. For the week, Apple lost 4.5%.
The energy complex was again under pressure, wit crude oil ending below the $103 per barrel level on Chinese growth concerns. Nabors (NYSE: NBR) lost 4.8% to $16.16, posting the biggest decline in the sector. Alpha Natural Resources (NYSE: ANR), the metallurgical coal producer, lost 2.6% on concern over future demand from China. The stock was upgraded to a Buy from Neutral at Nomura, which likely provided some level of support.
Elsewhere, Edward Lifesciences (NYSE: EW), the maker of tissue replacement heart valves, heart valve repair products, and hemodynamic monitoring devices, tumbled 5.6% to $68.55, leading the healthcare sector lower after JPMorgan expressed concern over sales of the company’s new Sapien heart valve. Rivals St. Jude Medical (NYSE: STJ) and Boston Scientific (NYSE: BSX) were also under heavy pressure, falling 4.3% and 3.4%, respectively.
Not all was negative in the session, Coinstar (NASDAQ: CSTR), the owner and operator of the Redbox Dvd rental kiosks, surged 7.3% following better than expected quarterly results driven primarily by stronger than anticipated consumer demand at Redbox throughout the quarter and lower than expected card processing fees.
Yum Brands (NYSE: YUM) led the gains in the restaurant stocks space. The stock jumped to the top of the S&P 500 as it gained 2.8% to $72.86, posting a new all-time high at $73.70. The company is schedule to release its earnings on April 18th, with analysts on average expecting a profit of $0.72 per share on revenues of $2.7 billion. Starbucks (NASDAQ: SBUX), the largest coffee shop chain in the world, logged also a new all-time high of $61.98 as positive momentum continued ahead of its quarterly results later in the month.
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