Stocks fell to 3-Month Low amid Greek Drama
Published on Tuesday, 15 May 2012 19:19 Written by Christopher Lynn
New York, May 15th (TradersHuddle.com) – Stocks fell after Greek politicians failed in another effort to form a new government, spurring fears that the country will exit the euro, which outweighed positive economic data in Germany and the U.S. Reports that Greek banks were seeing increased withdrawals raised worries over a bank run on the country’s banking system and a possible disorderly default, dragging the S&P 500 to a 3-month low.
The Dow Jones Industrial Average lost 63.65, or 0.50%. The S&P 500 index skid 7.69 points, or 0.57%, while the NASDAQ fell 8.82 points, or 0.30%.
The market started in positive territory after a better than expected GDP reading in Germany, helped the euro zone avoid a recession in the first quarter of the year. Economic data in the U.S. was basically inline with consensus, as retail sales climbed 0.1% in April and CPI was unchanged, with the core CPI climbing 0,2%.
However, the mood turned grimed as the session progresses amid chatter over a bank run on Greek banks. On the final hour of trading, stocks faded on news that Greek depositors withdrew 700 million euros from Greece’s banking system, as political leaders failed to form a new government, 9 days after the election, increasing the probability for the country to exit the euro.
All of the S&P 500 sectors ended the session in negative territory, with energy, materials, and utilities posting the biggest percentage declines, while consumer stocks posted the smallest drops.
The energy sector was impacted by lower crude oil prices, as traders continued to pound prices, pushing it to settle below $94 per barrel and as coal stocks were under heavy pressure following a revised weakened outlook from Patriot Coal (NYSE: PCX). The company lowered its sales volume and price estimates for Appalachian metallurgical coal.
Alpha Natural Resources (NYSE: ANR), the metallurgical coal producer, tumbled more than 9% to $11.92 after posting a fresh 52-week low of $11.79 amid the Patriot news. Adding to the woes of the sector, Chesapeake Energy (NYSE: CHK) tumbled more than 5% in the session after the company said that it will increase its borrowing to $4 billion as it faces a liquidity crunch. Standard & Poor's cut its credit rating on Chesapeake to "BB-" from "BB," one notch lower into "junk" status.
Phillips 66 (NYSE: PSX), formerly ConocoPhillips downstream business, was the only stock in positive territory on the energy sector. Shares climbed more than 1% after Citigroup initiated coverage on the stock with a Buy rating.
In the consumer space, Home Depot (NYSE: HD) tumbled 2.4% to $48.67, posting the second biggest percentage decline in the Dow Jones Industrial Average. The company posted a slight miss on the top line, while it posted inline results in its bottom line.
Avon Products (NYSE: AVP) also weighed on consumer stocks, as shares plunged to the bottom of the S&P 500. Avon tumbled 9.7% to $18.71 after Coty withdrew its $10.7 billion takeover bid.
However, TJX Companies (NYSE: TJX) rallied to the top of the broad market index, as shares jumped nearly 7% after the retailer posted better than expected earnings and boosted its full-year guidance.
Also boosting the sector, were shares of homebuilders that reacted positively to data that showed that homebuilder sentiment jumped to 29 in May from 24 in April, beating expectations and hitting a 5-year high. Lennar (NYSE: LEN) rallied 2.7%, while D.R. Horton (NYSE: DHI) jumped 2.54%.
Elsewhere, Groupon (NASDAQ: GRPN) jumped 3.71%, adding to its surge from the prior session after the company’s quarterly results topped Wall Street’s expectations.
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