Renewed concerns about the pace of the economic recovery sent investors away from stocks as a number of disappointing economic data indicated the pace of economic recovery is uneven. Benchmark indexes fell to their lowest close in nearly a month.
The Dow Jones Industrial Average snapped a two-day winning run, dropping 144 points, as a surprise rise in jobless claims shook investors’ confidence and showed that unemployment remains a cause for concern. The disappointing economic readings offset excitement resulting form an uptick in deal activity. Intel (NASDAQ:INTC) announced that it would pay $7.68 billion for security software maker McAfee (NYSE:MFE) but the announcement was overlooked by recession-wary traders.
First Niagara Financial Group’s (NASDAQ:FNFG) announcement that it was planning to buy NewAlliance Bancshares (NYSE:NAL) in a $1.5 billion deal failed to enthuse investors either. The bid, if successful, could prove to be the largest unassisted deal since the financial crisis. Shares in First Niagara Financial dropped 6.5% after it made the announcement. NewAlliance Bancshares jumped 12.5%.
The tech-heavy Nasdaq Composite index dropped 1.66% to 2178.84. The broader Standard & Poor’s 500 index slid 1.7% to 1075.61, as a weak economic outlook weighed on materials and industrial sector shares. The broad-based losses saw only eight of the Nasdaq 100 managing gains on the day. All ten S&P 500 industry sectors closed in the red. Symantec (NASDAQ:SYMC), which competes with McAfee (NYSE:MFE) surged 6.2%.
This morning’s media reports suggest Potash (NYSE:POT) is looking at alternatives to emerge, possibly from China, to counter BHP Billiton’s (NYSE:BHP) hostile $130 per share offer. With no major economic data slated for release today, the day’s trading is likely to lack conviction even as traders come to terms with yesterday’s losses.
Yesterday, trading volume picked up slightly on the New York Stock Exchange, with 1.07 billion shares exchanging hands and declining issues running ahead of advancers by a four-to-one margin. The market’s measure of volatility, the CBOE Vix fear gauge spiked 7.5% to 26.44.
Gold continued to shine on its safe-haven appeal. Prices rose 4% to $1,235.40. investors’ flight to safety yesterday sent US Treasuries up in price even as next week’s scheduled auction of $100 billion came closer. The 10-year rose 18/32 in price and its yield dropped to 2.575%, down from 2.634% late Thursday.
Asian markets closed sharply lower today. The Nikkei 225 Stock Average dropped 2%, as the US dollar’s plunge to almost 15-year lows against the yen indicated exporters’ revenues could take a hit. The Shanghai Composite index in Mainland China fell 1.7% and the Hang Seng in Hong Kong closed down 0.4%.
After the close yesterday, Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) reported better-than-expected quarterly earnings. However, concerns that demand for technology products is slowing somewhat offset enthusiasm resulting from the results.
BHP BILLITN LTD (BHP): Free Stock Analysis Report
DELL INC (DELL): Free Stock Analysis Report
FIRST NIAGARA (FNFG): Free Stock Analysis Report
HEWLETT PACKARD (HPQ): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
MCAFEE INC (MFE): Free Stock Analysis Report
NEWALLIANCE BCS (NAL): Free Stock Analysis Report
POTASH SASK (POT): Free Stock Analysis Report
SYMANTEC CORP (SYMC): Free Stock Analysis Report
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