Apprehension about the European debt situation dragged the markets down through the day, before benchmarks staged a comeback and recouped most of the losses to close the day marginally lower. A late rally by telecom and technology shares helped the benchmarks erase most of its losses, but the financial sector was negatively impacted by European concerns.
The Dow Jones Industrial was down almost 1%, but recovered to close just 0.1% lower at 12,653.72. The Standard & Poor 500 slipped 0.3% to finish Monday’s trading at 1,313.01. The tech-laden Nasdaq Composite Index dropped 0.2% and closed the day at 2,811.94. Even the S&P 500 and Nasdaq had inched down by a percentage, before recovering from the day’s lows. The fear-gauge CBOE Volatility Index (VIX) gained 4.7% to close the day at 19.40. Consolidated volumes remained low on the New York Stock Exchange, Amex and Nasdaq, at roughly 6.2 billion shares, lower than the 200-day moving average of 7.8 billion shares. Decliners outnumbered the advancers on the NYSE, with 61% of the stocks declining while 35% of the stocks chalked up gains. The remaining 4% of the stocks were left unchanged.
Investors kept waiting for Greece to confirm the debt swap deal with private creditors. However, there were no signs of the deal being struck even as European Union leaders commenced their meet in Brussels. While Greece and the private creditors struggled to find a way out, German Chancellor Angela Merkel declined to comment on Greece at the European summit in Brussels. However, the two parties had reportedly agreed to strike a deal that would necessitate investors shouldering bigger cuts in government debt holdings. A Bloomberg report stated that Greece along with the private creditors were “close” to an agreement.
Additionally, fears from across the Atlantic further spooked investors after borrowing costs climbed higher. Portugal’s two-year interest rate on government debt soared to 21%, after hovering around 14% last week.
The financial sector paid the price for these concerns and the Financial SPDR Select Sector Fund (XLF) was down 0.9%. Bank of America Corporation (NYSE:BAC), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), American Express Company (NYSE:AXP) and Wells Fargo & Company (NYSE:WFC) dropped 3.0%, 1.8%, 1.9%, 1.5% and 1.2%, respectively.
While the markets moved lower for the greater part of the day, a late-rally from the telecom and technology sectors played a key role in pulling the benchmarks higher from the day’s lows. Telecommunication shares like AT&T Inc. (NYSE:T), Verizon Communications Inc. (NYSE:VZ), MetroPCS Communications, Inc. (NYSE:PCS) gained 0.6%, 1.1% and 0.6%, respectively. As for the technology shares, International Business Machines (NYSE:IBM), Microsoft Corporation (NASDAQ:MSFT), Apple Inc. (NASDAQ:AAPL) and Oracle Corporation (NASDAQ:ORCL) gained 1.1%, 1.3%, 1.3% and 0.6%, respectively.
On the economic front, the Bureau of Economic Analysis came out with personal income and spending numbers. According to the report: “Personal income increased $61.3 billion, or 0.5 percent, and disposable personal income (DPI) increased $47.1 billion, or 0.4 percent, in December. Personal consumption expenditures (PCE) decreased $2.0 billion, or less than 0.1 percent. In November, personal income increased $7.4 billion, or 0.1 percent, DPI decreased $4.1 billion, or less than 0.1 percent, and PCE increased $11.4 billion, or 0.1 percent, based on revised estimates.” Consumer spending remained almost flat in December and was at its lowest point since June 2011.
To read this article on Zacks.com click here.
Zacks Investment Research
