Stocks Closed Narrowly Mixed; Logged Worst Weekly Performance Since June

Published on Friday, 12 October 2012 18:12 Written by Christopher Lynn

New York, October 12^th (TradersHuddle.com) – Most stocks closed lower, with the major benchmark indices ending narrowly mixed, as equities logged their biggest weekly drop since the first week of June. A better than expected reading in consumer sentiment helped moved stocks to session highs, but underperformance in banking stocks after earnings season started in the space, weighed on broad performance.

The Dow Jones Industrial Average gained 2.46 points, or 0.02%. The S&P 500 index slid 4.25 points or 0.30%, while the NASDAQ fell 5.30 points, or 0.17%.

For the week, the Dow slumped 2.07%, while the S&P 500 lost 2.21% and the NASDAQ tumbled 2.94%.

The market started in a lackluster fashion after JPMorgan and Wells Fargo reported their quarterly results. Both banks reported earnings that were above consensus, but participants moved to sell both names into the open. Overseas markets saw mixed action, with Europe under pressure despite August industrial production in the euro zone coming better than expected.

However stocks saw a brief lift after a report showed consumer sentiment rose in October to its highest level in five years, but at the end the poor performance in financials dragged on the overall market, capping the worst weekly performance in more than 4 months. Most S&P 500 sectors ended in negative territory, with only the industrials and consumer staples sectors edging higher for the session. For the week, all of the S&P 500 sectors ended in the red.

Financials fell more than 1%, with JPMorgan (NYSE: JPM) losing 1.14% and Wells Fargo (NYSE: WFC) slumping 2.6%. JPMorgan posted both earnings and revenue that topped consensus, while saying that it believes housing has turned the corner and has continued to improve. Meanwhile, Wells beat earnings expectations by a penny but revenue was shy of consensus. 

Participants sold the names particularly as results showed that profit margins are being squeezed. Rivals Bank of America (NYSE: BAC) tumbled 2.4%, posting the biggest decline in the Dow Jones Industrial Average, while Citigroup (NYSE: C) slumped 2%. BofA reports its quarterly results on October 17^th and Citigroup on Monday, October 15^th. On average analysts expect Citi to report a profit of $0.96 per share on revenue of $18.71 billion.

In tech land, Advanced Micro Devices (NYSE: AMD) weighed on the chipmakers space. The stock plunged more than 14% to new multi-year lows after the company issued downside guidance for fiscal third quarter, saying it sees revenue dropping 10% from the prior quarter and gross margin coming about 31%, down from the previous expectation of 44%. Advanced Micro ended at the lows of the session at $2.74, a new multi-year low.

Rival Intel (NASDAQ: INTC) fell 0.92% to $21.48 after the stock also logged a new 52-week low at $21.40. Texas Instruments (NASDAQ: TXN) also saw weakness, but was able to close near the neutral line, falling only 0.07%.

The consumer staples and industrial sectors logged slight gains in the session, as Wal-Mart (NYSE: WMT), Dean Foods (NYSE: DF), and Boeing (NYSE: BA) outperformed. Boeing jumped 1.44% to $71.85 after bullish commentary from Oppenheimer, with the firm citing the company’s commercial backlog that stands near record highs. Dean Foods rallied to the top of the consumer staples sector, with shares jumping 2% after Stifel Nicolaus upgraded the stock to a Buy with a target price of $18 per share. Meanwhile, Wal-Mart gained more than 1% after Jefferies upgraded the stock to a Buy from Hold.