Stock Market News for June 10, 2011 - Market News

Finally, investors enjoyed some cheer as the markets broke their six-day losing streak buoyed by positive data on export levels and a shrinking trade deficit. While this report provided optimism about a recovery in the economy, job data once again failed to suggest any improvement. Additionally, experts opine that this is a short-lived technical bounce back and expect the S&P 500 to trace back to its March low of 1,250.

The markets finally found a place in the positive zone after ending in the red for six consecutive days. The Dow Jones Industrial Average (DJIA) climbed up 0.6% to settle at 12,124.36. The Standard & Poor 500 (S&P 500) was up 0.7% and finished the day at 1,289.00. The Nasdaq Composite Index closed at 2,684.87, after jumping 0.4%. The fear gauge CBOE Volatility Index (VIX) registered its biggest drop since March 21, as it plunged 7% to close below 18. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes remained low at 6.31 billion shares, below the daily average of 7.59 billion. On the NYSE, the advance-decline ratio was 1,904 to 1,076.

Trade data released by the Department of Commerce lifted the markets after the trade deficit came in lower than expected. According to the report, the trade deficit narrowed to $43.7 billion in April and was down from $46.8 billion recorded in March. The consensus for the current period had projected the trade deficit to touch $48.5 billion. US exports also set a new record at $175.6 billion while imports came in at $219.2 billion. The report also suggested a $3.0 billion decrease in the goods deficit, with exports of goods increasing $2.0 billion to $126.4 billion, and imports of goods decreasing $1.0 billion to $184.5 billion.

Separately, the Commerce Department reported: “Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $447.2 billion at the end of April, up 0.8 percent (+/-0.4%) from the revised March level and were up 13.8 percent (+/-1.2%) from a year ago”. It also said that sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, was up 0.3% from March level and up 14.4% from April 2010 level to $393.5billion.

Jobs data released by the Department of Labor once again failed to indicate any recovery as initial claims increased by 1,000 for the week ending June 4. Disappointing jobs data has been the key issue for the markets and with weekly jobless claims increasing more than expected to 427,000 last week, ensuing concerns will only deepen. Nonetheless, the 4-week moving average decreased 2,750 from the previous week’s revised average of 426,750 to 424,000. Over the past few weeks, claims have failed to drop below the 400, 000 level, which indicates strong job growth.

Crude oil prices moved higher, continuing to draw impetus from the Organization of Petroleum Exporting Countries (OPEC) members’ failure to take a decision on increasing crude output. On Wednesday, major oil exporting nations challenged Saudi Arabia at the OPEC meeting in Vienna, Austria. Subsequently, for the first time in almost two decades the board failed to decide upon oil production targets. Light sweet crude oil for July delivery rose by $1.19 to settle at $101.93 per barrel and the Energy Select Sector SPDR (XLE) fund was up 1.4%. Among the gainers for the energy sector were Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP), Transocean Ltd. (NYSE:RIG), Halliburton Company (NYSE:HAL), Baker Hughes Incorporated (NYSE:BHI), BP plc (NYSE:BP) and National Oilwell Varco, Inc. (NYSE:NOV) and they increased 1.3%, 1.5%, 4.0%, 2.7%, 2.8%, 1.7% and 2.3%, respectively.

On the international front, The European Central Bank (ECB) kept its key interest rate unchanged as expected at 1.25%. ECB President Jean-Claude Trichet suggested that “strong vigilance is warranted,” and indicated that the ECB would raise rates in July. Responding to inflationary pressures in the markets of Germany and France, the ECB is in a tightening mode

In the financial sector, Financial Select Sector SPDR (XLF) fund was up 1.2% and shares including The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC), Citigroup, Inc. (NYSE:C) and American International Group, Inc. (NYSE:AIG) jumped 1.5%, 2.6%, 1.5%, 1.0%, 2.6% and 2.9%, respectively.

Stock Market News for June 10, 2011 – Market News

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