Mounting tension in Libya sent crude soaring to $100 per barrel before prices settled at two dollars lower and stocks plunged on Wednesday, for the second straight day. To add to the jitters, Hewlett-Packard Company (NYSE:HPQ) cut its revenue forecast for the current fiscal year and reported revenues significantly below expectations.
On Wednesday, volumes were above average and the fear-gauge Volatility Index (VIX) increased again, by 5%. The Dow Jones Industrial Average (DJIA) lost 0.9% to end at 12,105.78. The Dow has lost more than 100 points on each of the past two days and with a combined fall of 285.47 points the index has registered its largest drop since mid-August 2010. The Standard & Poor 500 shed 0.6% and closed at 1,307.40. The tech-laden Nasdaq was down 1.2% to 2,722.99. Decliners outshined advancing stocks on the NYSE and for every two stocks that fell, one stock advanced.
Protestors’ demand for the resignation of Libyan leader Moammar Gaddafi faced a challenge from the leader’s loyalists as they carried on their fight against the demonstrators. The tension has sprung widespread chaos and there was shooting in the streets of the Libyan capital Tripoli. Reportedly, the revolt has already led to the death of almost 300 people.
Mounting unrest in the nation which produces 2% of the global daily oil output has been pushing oil prices higher leading to widespread concerns not only about crude prices, but also over oil supply. Fears over the crisis spreading to other countries in the region have also been troubling the economic world.
However, amidst the gloom, energy stocks rose and led the broader index. Chevron Corp. (NYSE:CVX) and Exxon Mobil Corp. (NYSE:XOM) both increased 1.9% and led the Dow components. Among the S&P 500’s 10 company groups, energy stocks rose 2% and were the only gainers.
On the domestic front, the National Association of Realtors (NAR) reported that existing home sales recorded modest gains for January. This is the third consecutive month-over-month gain and the fifth rise in six months. Home sales in January were up 2.7% from December last year and were up 5.3% from January 2010, according to NAR.
Technology stocks fell sharply after bellwether HP reported lesser-than-expected revenue numbers and released a disappointing outlook for the current fiscal year. Considered one of the largest technology companies, HP posted a decline in personal computers and technology services. Shares of HP shed a significant 9.6%.
Among other declining stocks, US Airways Group, Inc. (NYSE:LCC) lost 6% as higher crude prices threatened to affect the airline’s profit margins. Ford Motor Co. (NYSE:F) said it will recall around 150, 000 F-150 pickup trucks and its stock fell 2%. The TJX Companies, Inc. (NYSE:TJX) reported a disappointing sales outlook and the company’s shares dropped 2%.
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