Dow Posts Sixth Straight Loss on European Jitters
Published on Wednesday, 09 May 2012 19:11 Written by Christopher Lynn
New York, May 9th (TradersHuddle.com) – Stocks were able to rebound from their worst levels in the session, but still closed in negative territory, with the Dow extending its losing streak to the sixth consecutive session. Participants bid the market from the lows of the session amid news that Greece will receive another bailout payment despite struggling to form a government that will be able to support the bailout and the current handling of the debt crisis.
The Dow Jones Industrial Average lost 97.03 points, or 0.75%. The S&P 500 index fell 9.14 points, or 0.67%, while the NASDAQ dropped 11.56 points, or 0.39%.
The market started under heavt pressure, as risk assets were being hit amid the ongoing European jitters as the Greek political chaos continued and as Spanish bond yields moved above 6%, pressuring the region’s currency. Markets were pricing in an increased chance of a possible default on interest payments due next month, and the potential for bigger problems as Spain's 10-year yield move higher, clouding the ability of the country to finance its obligations.
However, stocks were able to recover more than half of their losses throughout the session on news that the board of the European Financial Stability Facility agreed to make a 5.2 billion euro payment in emergency aid to Greece. Despite the recovery, major benchmark indices closed lower, with the Dow posting its sixth consecutive loss.
Most of the S&P 500 sectors closed in negative territory, with just technology and utilities edging into positive territory. Economic sensitive sectors, like industrials, financials, and materials saw the biggest percentage declines in the session.
Untied Technologies (NYSE: UTX) was a notable drag in the industrial sector, as shares tumbled 2.3%, posting the biggest percentage decline in the Dow Jones Industrial Average. The company announced that it has named its interim CFO as Chief Financial Officer. General Electric (NYSE: GE) also dragged on the blue chip index, falling 1.77%.
On the flip side in the sector, Ingersoll Rand (NYSE: IR) rallied more than 5% on news that Nelson Peltz's Trian Fund disclosed a 7.33% stake in a 13D filing.
Also in the positive side, Walt Disney (NYSE: DIS) was able to break out to new all-time highs and post the biggest gain in the blue chip index after an earnings beat. The world’s largest media company jumped 1.63% to $45.02 after its results benefited from strength in its cable channels and theme parks. The stock received a boost from several brokerage houses boosting their target price. However, not all was rosy on the earnings front, as Macy’s (NYSE: M) tumbled 3.7% to $38.05 after disappointing investors with lackluster full year guidance. The department store operator beat earnings expectations, boosted by higher online sales.
In the financial sector, Citigroup (NYSE: C) and Morgan Stanley (NYSE: MS) saw heavy pressure amid the euro zone jitters and as participants worried over the impacts of a possible Moody’s downgrade. Both Morgan Stanley and Citi lost more than 2%. Bank of America (NYSE: BAC) also retreated, but only saw a decline of 0.77% in the session after trading as low as $7.65. The stock has support at its declining 200day moving average around the $7.30 area.
Crude oil prices fell for a sixth-straight day to settle below $97 per barrel, while gold slumped below $1,600 an ounce. Still, gold miners saw a rebound from oversold levels. Newmont Mining (NYSE: NEM) rallied nearly 4%, while Goldcorp (NYSE: GG) jumped 3%. The space received a boost after Dahlman Rose said the space is evolving into dividend plays, with current bullion prices generating healthy cash flows for producers,
In the telecommunications space, MetroPCS (NYSE: PCS) surged to the top of the S&P 500, with shares rallying more than 14% on reports that the company is holding talks with T-Mobile USA over a possible merger.
Meanwhile, Frontier Communications (NYSE: FTR) jumped more than 2% helping the technology sector ETF, as it post its biggest percentage gain, and Apple (NASDAQ: AAPL) continued to show signs of stabilization, as shares gained 0.18% to $569.18 after trading as low as $560.85, a higher low from the prior session.
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