Stocks Mixed After Bernanke Undermined Earlier Gains
Published on Thursday, 07 June 2012 17:51 Written by Christopher Lynn
New York, June 7th (TradersHuddle.com) – Stocks lost steam at the end of the session, with major indices ending mixed for the session. Earlier gains propelled by China’s decision to slash interest rates came under pressure after Bernanke’s comments undermined hopes of strong and swift action from the Fed to prop up the U.S. economy amid the challenges of the debt crisis in Europe and sluggish job growth. Financials received additional pressure after the Fed, before the closing bell, announced new capital rules.
The Dow Jones Industrial Average gained 46.17 points, or 0.37%. The S&P 500 index slid less than 1 point, or 0.01%, while the NASDAQ dropped 13.70 points, or 0.48%.
The market started to the upside after futures jumped on news that China cut their interest rate by 25 basis points and slashed the reserve requirement ratio for banks. Adding to the bullish tone, investors saw evidence that European policymakers would act to prop up Spain’s banking sector, sending European shares to close higher. A successful bond offering in Spain also helped eased fears over the deteriorating debt crisis in the region.
The economic data didn’t ruin the positive mood; weekly jobless claims were just slightly better than expected, which helped keep the market near its highs of the session as participants awaited the testimony of the Fed Chairman in Capitol Hill.
The upside move lost some steam after in prepared remarks to the joint economic committee, Ben Bernanke said the Fed is "prepared to take action" if needed to boost the U.S. economy, but made no specific commitment to more easing. The Fed Chief said that the economy continues to expand at a moderate pace but faces ongoing challenges from the debt crisis in Europe and the sluggish job growth.
The remarks undermined hopes form swift action from the Fed amid the slew of weak economic data points that participants have been digesting in the last month. Also weighing on the stocks was a downgrade of Spain by Fitch. Markets lost more steam in the final hour of trading, with the major benchmark indices ending mixed for the day, after the Federal Reserve announced new capital rules for financial institutions.
Utilities, industrials, and consumer staples logged the biggest gains in the S&P 500, while technology and financials closed in negative territory, dragging the broad market index and the tech heavy NASDAQ into the red.
Financials suffered the most into the final hour of trading following the new capital rules announced by the Fed, designed to prevent another financial crisis. Morgan Stanley (NYSE: MS) logged the worst performance in the sector, as shares slumped 3.8%. Meanwhile, Bank of America (NYSE: BAC) lost 2.88% to $7.42, posting the biggest percentage decline in the Dow Jones Industrial Average. Yesterday, BofA has rallied more than 7% on a breakout above its 200day moving average.
On the flip side, Regions Financial (NYSE: RF) rallied 2.4% to $6.09, posting the biggest percentage gain in the financial sector after the stock was upgraded to Outperform from Neutral at Macquarie.
In the tech sector, Juniper Networks (NASDAQ: JNPR) tumbled to the bottom of the S&P 500; as shares lost more than 5% to $16.5 after it was downgraded to a Hold from Buy at Needham. F5 Networks (NASDAQ: FFIV) lost 1.7% to $101.55 in the session, despite Needham initiated its coverage with a Buy rating and a target price of $130.
Apple (NASDAQ: AAPL) added 0.05% to $571.7 after trading as high as $577.32 and as low as $570.50. The stock actually outperformed the sector amid news that Sprint’s Virgin Mobile will start offering a pay as you go iPhone on June 29th.
Meanwhile, Facebook (NASDAQ: FB) fell 1.9% to $ 26.31 after trading as low as $26.15. The stock was not able to extend the gains from the sharp reversal in the prior session after it logged a new record low of $25.52.
Industrials were among the top performers, with stocks like United Technologies (NYSE: UTX) jumping to the top of the blue chip index, as it logged a gain of 2.4% to $75.44.
In the consumer discretionary space, Goodyear Tire (NYSE: GT) jumped more than 3% on news that the company acquired Nippon Giant Tire unit in Japan for an undisclosed amount. Homebuilders also saw some of the top gains in the sector once again, as PulteGroup (NYSE: PHM) jumped 1.4% to $8.88 after the stock was upgraded to Outperform at Credit Suisse.
Elsewhere in the earnings front, J.M. Smucker (NYSE: SJM) added 0.05% to $76.09 after the company posted results that topped expectations in both the top and bottom lines. Men’s Warehouse (NYSE: MW) plunged nearly 19% after the retailer missed earnings estimates and warned of weak earnings in the coming quarter, while lululemon athletica (NASDAQ: LULU) tumbled 8.8% to $63.84. The company beat earnings expectations but issued downside guidance for the quarter and mixed guidance for fiscal 2013, as same-store sales growth is expected to slow.
- Trading Idea: - Is Goodyear close to Resistance?
- Shares of F5 Networks Hesitating?
- Is Apple Closing in to Resistance?
- Trading Idea: - Is Bank of America close to Resistance?
- Apple Is Close to the 50 Day Moving Average
- Goodyear Is Near a Key Resistance Area
- Trading Idea: Entry Levels for Apple
- Shares of F5 Networks Hesitating?
- NASDAQ 100 Mid-day Update: Higher Top Performers: CSCO, NTAP, FFIV
- Is Apple Waiting for a Break Out?
Related Partner Headlines
- Cramer Quick Take: The 60-Inch TV Will Be Key This Holiday - TheStreet.com
- Apple, Intel, MicroStrategy: Tech Winners & Losers - TheStreet.com
- What You Can Get on Thursday's Black Friday - TheStreet.com
- Banks Cough Up $26.1 Billion in Mortgage Relief - TheStreet.com
- Bank of America, MBIA Death Match Hurts Both: Moody's - TheStreet.com
- Good Follow-Through - TheStreet.com
- iPhone 5S for Next Year: Rumor - TheStreet.com
- A Reality Check on Facebook and Yahoo! Rumors - TheStreet.com
- Why Apple's Stock Is an Undeniable 'Buy' Right Now - TheStreet.com
- Bank of America Will Cut to Hit Earnings: Analyst - TheStreet.com
Recent Trading Ideas
Chesapeake Energy Is Close to Resistance
Windstream Is Near its 50 Day Moving Average
Applied Materials Is Close to Resistance
E*TRADE is Near a Key Support Area
First Solar is Near a Key Support Area
Trading Idea: Is Monster Worldwide close to Support?
Trading Idea: - Is Walgreen close to Resistance?
Latest Partner Headlines
Dow Today: Verizon Communications (VZ) Higher - TheStreet.com
Separating the Bargains From the Busts - TheStreet.com
Cramer Quick Take: The 60-Inch TV Will Be Key This Holiday - TheStreet.com
Cramer Quick Take: Cisco Wins If Fiscal Cliff Is Resolved - TheStreet.com
Gap Up and Sit - TheStreet.com
Apple, Intel, MicroStrategy: Tech Winners & Losers - TheStreet.com
Windows 8 PC Sales Disappointing: Report - TheStreet.com
Cramer Quick Take: Buy Home Depot and Lowe's - TheStreet.com
Dow JonesCompany ID [INDEXDJX:.DJI] Last trade:15,303.10 Trade time:4:36PM EDT Value change:▲8.60 (0.06%)
S&P 500Company ID [INDEXSP:.INX] Last trade:1,649.60 Trade time:4:35PM EDT Value change:▼0.91 (-0.06%)
NASDAQCompany ID [INDEXNASDAQ:.IXIC] Last trade:3,459.14 Trade time:5:15PM EDT Value change:▼0.28 (-0.01%)
In The Wires
Kenny Chesney Ticket Prices Slashed by TicketProcess.com; Tickets Still Available For The No Shoes Nation Tour
"Get Ready for Summer Sale" at Sublime Beauty® Continues: New Cellulite Whisperer® Products
Pratt & Whitney Rocketdyne Engines Boost Latest Communication Satellite into Orbit
Real Estate SEO Firm Announces Real Estate SEO Pros For Hire Programs
Company Now Offering Real Estate SEO Tips for Real Estate Professionals in All Markets
CRMnext Introduces Twitter Response for Customer Service Management through Social Networking Channels
Tips for Great Content Marketing for Local Search Success
Used VTEC Engine Now Included in Honda Parts Inventory at AutoProsUSA.com