Stock Market News for January 30, 2012 - Market News

On Friday, markets moved lower after a government report showed that GDP grew slower than expected in the last quarter of 2011. While corporate earnings failed to limit the losses, the Dow Jones Industrial Average suffered its first weekly fall this year. However, the S&P 500 limited its losses during the later hours after the White House announced it was expanding the foreclosure-prevention program.

The Dow Jones Industrial Average (DJI) lost 0.6% to close the day at 12,660.46. The Standard & Poor 500 limited its losses during the final hours and closed 0.2% lower at 1,316.33. The tech-laden Nasdaq Composite was the only gainer among these benchmarks, buoyed by a rally in technology shares, and it gained 0.4% to finish Friday’s session at 2,816.55. The fear-gauge CBOE Volatility Index (VIX) dropped a mere 0.2% to close at 18.53. The advancers managed to outnumber the decliners on the New York Stock Exchange (NYSE), as for 62% of the stocks that gained, 34% of the stocks moved down. The remaining 4% of the stocks were left unchanged. Total volume on the NYSE was 3.99 billion shares.

The week ended on a sorry note fort the Dow after it logged its first weekly loss of the year. The year 2012 had started on a bright note, with all the benchmarks continuing a decent winning trend. But a number of concerns negatively impacted the Dow last week. Greek debt-woes, dismal housing data and a rise in initial claims all contributed to its fall. Friday’s 0.6% loss was its biggest single-day drop for this year. The blue-chip index dropped 0.5% for the week, whereas its fellow benchmarks, S&P 500 and Nasdaq gained 0.1% and 1.1%, respectively for the week. However, with monthly gains of 3.6% so far, the Dow is still on track to register its fourth-consecutive month of gains. The Dow is also en route to recording its best percentage gain since 1997 and the biggest monthly gains since October last year.

It was the Gross Domestic Product (GDP) report by the Bureau of Economic Analysis that weighed down sentiment on Friday. According to the report: “Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the fourth quarter of 2011 (that is, from the third quarter to the fourth quarter)”. The 2.8% figure fell short of consensus estimates of a growth of 3.0%, dragging the markets lower. What was of particular concern about the figure was that it fell below projections. However, it was still the best recorded in almost one and a half years.

Corporate results from certain bellwethers also dragged down markets after they failed to match the Street’s expectations. Results from Chevron Corporation (NYSE:CVX), in particular, damped market sentiment. The oil major not only reported a drop in its earnings, but its earnings per share also failed to beat the Street’s estimates. The company’s revenues increased 11%, but even this figure fell short of projections. The company’s stock lost 2.5% and was the biggest loser among the 30 Dow components. Weakness in this stock also affected the broader markets. Ford Motor Company’s (NYSE:F) stocks also suffered a beating after its earnings failed to beat the Street expectations. Share prices of the company decreased by 4.2%.

While the markets were bogged down by a slower-than-expected GDP rate and dismal corporate results, the White House announced that it was expanding its foreclosure-prevention program. This development helped markets limit losses somewhat and also helped financial shares clock up gains. The Home Affordable Modification Program is designed to help homeowners who are battling to avoid a foreclosure. It will enable lower monthly loan payments and may in some cases also reduce the amount that homeowners owe. The financial sector was buoyed by the announcement and the Financial SPDR Select Sector Fund (XLF) ended 0.4% higher, after languishing in negative territory for the initial part of the trading day. Financial stocks like The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup, Inc. (NYSE:C), Wells Fargo & Company (NYSE:WFC) and UBS AG (NYSE:UBS) gained 3.0%, 2.3%, 1.6%, 1.9% and 0.5%, respectively.

Meanwhile, Goldman Sachs and Morgan Stanley also posted gains following reports that they may have a role to play in Facebook’s IPO offering. The social networking sites’ shares soared following reports that Facebook might file for an IPO early this week. Stocks like Zynga Inc. (NASDAQ:ZNGA), LinkedIn Corporation (NYSE:LNKD) and Groupon, Inc. (NASDAQ:GRPN) jumped 5.6%, 5.9% and 2.6%, respectively. Anticipation of this IPO also contributed towards gains for the tech sector to some extent. Consequently, Google Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL) and Dell Inc. (NASDAQ:DELL) gained 2.1%, 0.6% and 0.3%, respectively.

Stock Market News for January 30, 2012 – Market News

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