Stocks Mixed, as Investors Shrugged off European Jitters

Published on Monday, 07 May 2012 19:10 Written by Christopher Lynn

New York, May 7^th (TradersHuddle.com) – Stocks closed mixed for the session, as investors shrugged off the European jitters following the election defeats for the incumbents in France and Greece. The major benchmark indices ended off their lows, stabilizing after the NASDAQ and the S&P 500 posted their worst weekly decline of this year.

The Dow Jones Industrial Average lost 29.74 points, or 0.23%. The S&P 500 index added less than 1 point, or 0.04%, while the NASDAQ climbed 1.42 points, or 0.05%.

The market struggled at the start after Europe set the negative tone this morning on reaction to the election results in France and Greece, with voters rejecting austerity and raising doubts over the future of the debt crisis handling in the region. The overnight session saw heavy losses in Asia, particularly Japan, while Europe weakness was broad base but trying to come off their lows.

As the session progressed the market regained its footing and moved off their lows, helped by a rebound in European shares, as apparently the French election results had already been priced in the market. Some participants saw the rebound as a sign that the market was not expecting policies to move away from austerity and focus some more on growth. At the end of the session the broad market index edged into positive territory, while the blue chip index logged its 4^th consecutive session decline.

Among the S&P 500 sectors, was a mixed bag, with financials, healthcare, consumer staples, and materials posting gains, while, energy, industrials, and technology posted the biggest percentage declines.

Financials led the market higher, climbing more than 0.5% as a group, helped by a rebound in banking shares. Bank of America (NYSE: BAC) jumped 2.84% to $7.96, posting the biggest percentage gain in the Dow Jones Industrial Average. The stock had seem deteriorating momentum for the past weeks after hitting a high above $10 per share in April, however price action and the MACD seem to indicate that the negative momentum in the stock has bottomed.

Also boosting the performance in the sector was Fifth Third Bancorp (NASDAQ: FITB), as shares saw rallied 2.86%, posting the biggest percentage gain. On the flip side, American International Group (NYSE: AIG) tumbled more than 3% to $31.84 on news that the U.S. Treasury will reduce its stake in the company to 63%, by selling 163.9 million shares for about $5 billion, with AIG agreeing to buy $2 billion worth of stock. The Treasury said that it plans to sell shares in the offering at $30.50 per share, 7% lower over Friday’s closing price, but a little higher from the prior sale at $29 per share. The stock traded as low as $30.46 in the session.

In the consumer staples sector, earnings from Tyson Foods (NYSE: TSN) helped boost performance. The chicken and pork producer rallied more than 3% after posting better than expected earnings, which were helped by the company efforts to raise prices. However, Procter & Gamble (NYSE: PG) struggled in the session after it was downgraded to Market Perform from Outperform at Wells Fargo.

Both heavy weights the energy and technology sector were on the losing side in the session amid worries over the impacts of Europe and concerns over growth following last week’s lackluster job growth in the U.S.

Crude oil prices traded below $98 per barrel, weighing on the sector performance. The worst performer in the sector was Phillips 66 (NYSE: PSX), the downstream business spinoff from ConocoPhillips, which lost 2.7%. On the positive side was Baker Hughes (NYSE: BHI), as shares jumped 1.5% in the session following news of the company’s latest rig count.

In the technology space, Apple (NASDAQ: AAPL) gained 0.75% to $569.48, breaking out of the recent weakness of the past sessions that had took the stock below its 50day moving average. According to reports, Apple will likely unveil a $799 MacBook Air during the third quarter, making it the cheapest Mac. Meanwhile Google (NASDAQ: GOOG) jumped 1.8% to $607.55 and struggling First Solar (NASDAQ: FSLR) rallied to the top of the S&P 500, as shares climbed 4.3% to $17.67, rebounding from multiyear lows.

Elsewhere, Walt Disney (NYSE: DIS) was among the top gainers in the blue chip index, with shares jumping 2% to $43.82 ahead of its earnings report scheduled for tomorrow after the close on news that its film the Avengers smashed the prior opening records in the domestic box office. The film company’s Marvel studios film made a record $200 million in its North American box office debut. The five-superhero film has collected a massive $641.8 million since it opened in international markets on April 25^th amid Disney’s aggressive marketing.

And Vertex Pharmaceuticals (NASDAQ: VRTX) surged 55.36% to $58.12, posting the biggest gain in the NASDAQ on news that its cystic fibrosis combination therapy showed promise in a mid-stage study.