Stock Market News for January 12, 2012 - Market News
12 Januar 2012 - 10:06AM
Zacks
European debt concerns once again
weighed down the markets and dragged the Dow slightly lower, while
the S&P 500 and Nasdaq posted meager gains. Reports of
Germany’s economy contracting during the end of 2011 and a downward
revision of economic growth estimates by the European Union (EU)
dented the markets. However, a late upward swing helped the markets
extend their stay around five-month high levels.
The Dow Jones Industrial Average
(DJI) dropped 0.1% to settle at 12,449.45. The Standard & Poor
500 (S&P 500) edged up by a mere 0.03% to finish yesterday’s
trading session at 1,292.48. The Nasdaq Composite Index added 0.3%
to close at 2,710.76. The fear-gauge CBOE Volatility Index (VIX)
rose 1.7% to settle at 21.05. On the New York Stock Exchange, NYSE
Amex and Nasdaq, consolidated volumes were roughly 6.65 billion
shares, marginally lower than the daily average of 6.7 billion.
Advancers on the NYSE edged out the decliners, with 54% of the
stocks registering gains versus 43% which traded lower. The
remaining 3% of the stocks were left unchanged.
Looking at the margin by which the
benchmarks moved yesterday, it might seem that there were not too
many developments that could sway the markets. However,
developments that came to light yesterday once again sparked
recessionary fears to an extent. Debt crisis fears remained
unabated in Europe, and apart from German and Italy’s leaders being
upbeat about the situation there was nothing else to be happy
about.
Germany, one of the important
economies of the European Union, dampened sentiment after reporting
that its economy had suffered a contraction at the end of last
year. Germany’s Federal Statistics Office sparked fears of a
possible recession as it said on Wednesday that the nation’s
economy had possibly shrunk by 0.25% in 2011’s last quarter.
Investors will have to wait until mid-February for the final
numbers. However, the statistics office said that the nation had
registered a strong 3% rate of growth for the full year.
Adding to these woes, the euro also
slid against the greenback to hover around a 16-month low.
Meanwhile, Fitch Ratings added to the gloom after predicting a
dismal road ahead for the euro. David Riley, Fitch’ s head of
sovereign ratings, said: "The ECB needs to be more actively
engaged, but it can’t save the euro on its own. The crisis won’t be
over until we have a broad-based economic recovery". He also urged
the European Central Bank (ECB) to play a larger role in order to
avert a "cataclysmic" euro collapse. Meanwhile, the ECB was
expected to keep the interest rate intact at 1%.
Separately, the European Union
reduced its third quarter economic growth forecast from 0.2% to
0.1%. With this downward revision, growth could hit its slowest
pace since last two years. With concerns dominating the mood,
investors will also remain nervous about how the bond auctions of
Italy and Spain scheduled for this week, turn out. A poor showing
would further dampen the already dismal outlook about Europe.
However, German Chancellor Angela
Merkel and Italian Prime Minister Mario Monti both sounded upbeat
about tackling lingering European debt woes. Angela Merkel
particularly appreciated Italy’s approach towards dealing with
economic threats. Speaking about the austerity measures adopted by
the Italian government, Angela Merkel said: "We have followed with
great respect how quickly the measures are being implemented…The
work of the Italian government is being honored".
Meanwhile, on the domestic front,
conditions looked better after the Federal Reserve’s Beige Book
said that “national economic activity expanded at a modest to
moderate pace during the reporting period of late November through
the end of December”. The Beige Book reported an increase in
consumer spending, expansion of the travel and tourism sector,
higher demand for non-financial services, while the manufacturing
activity expanded but at a slower pace.
Coming to individual sectors,
materials enjoyed a second-consecutive day of gains and the
Materials Select Sector SPDR (XLB) fund posted gains of 1.0%. Among
the stocks, Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX),
Southern Copper Corporation Com (NYSE:SCCO), Alcoa Inc. (NYSE:AA),
Newmont Mining Corporation (NYSE:NEM), Nucor Corporation (NYSE:NUE)
and U.S. Gold Corporation (NYSE:UXG) gained 3.2%, 1.3%, 2.0%, 1.1%,
1.3% and 2.4%, respectively. Notably, AK Steel Holding Corporation
(NYSE:AKS) gained 8.6% after Credit Suisse upgraded the company to
“outperform”.
ALCOA INC (AA): Free Stock Analysis Report
AK STEEL HLDG (AKS): Free Stock Analysis Report
FREEPT MC COP-B (FCX): Free Stock Analysis Report
NEWMONT MINING (NEM): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
SOUTHERN COPPER (SCCO): Free Stock Analysis Report
US GOLD CORP (UXG): Free Stock Analysis Report
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