Stocks Fell amid Growth Woes; Dow Logged Sixth Consecutive Loss

Published on Thursday, 12 July 2012 18:34 Written by Christopher Lynn

New York, July 12^th (TradersHuddle.com) – Stocks closed lower, despite rebounding from session lows, with the Dow posting its sixth consecutive decline. Defensive sectors moved higher, while technology and financials dragged the broad market lower.

The Dow Jones Industrial Average lost 31.26 points, or 0.25%. The S&P 500 index fell 6.69 points, or 0.50%, while the NASDAQ dropped 21.79 points, or 0.75%.

The market started in negative ground, amid negative sentiment following weakness in Asian and European markets, as participants continued to fret about a global economic slowdown and the lack of a clear signal for further stimulus from the Fed. On economic news, weekly jobless claims were better than expected, but the improvement was driven by seasonal factors rather than labor market improvement.

Earnings disappointments also weighed on sentiment. SUPERVALU (NYSE: SVU) plunged after missing consensus by a wide margin and announcing the suspension of the dividend and the launch of a review of strategic alternatives. Marriott International (NYSE: MAR) was hit after reporting inline earnings on revenues that were slightly below consensus, while providing inline earnings guidance for the full year; and Progressive (NYSE: PGR) slumped after the company missed earnings expectations by $0.05 per share on inline revenue from net premiums written.

The negative tone persistent for most of the session, but stocks did attempted a rebound from session lows, which actually took the Dow into positive territory, but the weight of financials and technology poor performance ultimately results in the broad market slumping once again amid the global growth woes.

Healthcare stocks posted the best performance as a group in the S&P 500, boosted by a rally in Merck (NYSE: MRK). The pharmaceutical company announced positive results from Phase 3 clinical trial of odanacatib, its investigational cat-K inhibitor for osteoporosis. Shares of Merck led the blue chip index, as they jumped more than 4% to $42.91.

In the consumer space, we had a mixed picture. Procter & Gamble gained 3.75% to $63.70 after reports that activist investor William Ackman’s Pershing Square is building a position in P&G for several weeks, which might grow further becoming one of its biggest holdings.

Homebuilders rallied after a bullish forecast from a widely followed industry analyst. Lennar (NYSE: LEN) jumped 3.6%, while PulteGroup (NYSE: PHM) gained 2.85%.

McDonald’s also lend support to the Dow and the consumer space, as shares jumped 2.7% to $91.93 amid positive expectations for its monthly same store sales numbers, while Netflix (NASDAQ: NFLX) jumped 4% amid a technical rally, posting the biggest gain in the consumer discretionary sector.

But grocery stocks were hit hard, after the SUPERVALU news. Safeway (NYSE: SWY), the owner and operator of a grocery store chain, tumbled 12.5% to $15.73, posting the biggest decline in the S&P 500 Index, as shares of SUPERVALU were nearly cut in half.

Financials were weighed down by the poor performance from insurers, following Progressive’s results and as participants prepared for the banks earnings season to start tomorrow before the bell with JPMorgan (NYSE: JPM) reporting its quarterly results, which will provide visibility on the quarter the lender incurred the massive trading loss. The stock lost 1.6% in the session, while rival Bank of America (NYSE: BAC) tumbled nearly 2%.

In technology, Lexmark (NYSE: LXK) tumbled nearly 8%, posting the biggest decline in the sector after Barclays downgraded the stock to Underweight from Equal Weight and lowered its target price to $24 from $29 saying their research continues to point toward increased pressure on printing due to secular and macroeconomic headwinds.

Apple (NASDAQ: AAPL) also underperformed the broad market, falling 0.9% to close below $600. Apple fell amid reports that sellers’ in China’s ecommerce site Taobao are already accepting pre-orders for the iPhone 5. The tech giant has not even release the date of the potential unveil event, and the site is now carrying mock up pictures and technical specifications.

Meanwhile, Intel (NASDAQ: INTC) slumped 2.6% and Hewlett Packard (NYSE: HPQ) lost 1.73%.