Stock Market News for March 29, 2011 - Market News

Domestic economic data could not support the indices’ upward momentum on Monday as markets snapped back to red in the final minutes, hurt by cautious corporate guidance and geopolitical tensions. Consumer spending edged ahead while inflation soared to hit new highs post June 2009. Investors’ apprehension against betting big bucks was highlighted as volumes touched their lowest levels for the year.

The Dow Jones Industrial average sank 0.2% and closed at 12,197.88. The Standard & Poor 500 and Nasdaq shed 0.3% and 0.5% to finish the day at 1,310.19 and 2,730.68, respectively. Geopolitical concerns kept investors’ fears about volatility alive with only 5.9 billion shares traded on the New York Stock Exchange, the lowest volumes till date for 2011. On the NYSE, nine stocks declined for every six that advanced. The CBOE Volatility Index (VIX) moved up to nearly 19.

Earlier in the day, domestic data provided cushion helped propel indices higher. According to the Commerce Department, consumer spending had its fastest run in four months and inflation rose the highest since June 2009. Personal Consumption Expenditures (PCE) was up by 0.7% in February, well ahead of consensus estimates of a rise of 0.3%. For January, the index had risen by 0.3% after gaining 0.4% in December 2010. The December increase in spending was revised down from 0.5%, while the figure for January was revised up from 0.2%. Higher gasoline prices are one of the primary factors behind the increase. Personal income rose 0.3% in line with consensus expectations. However, the rise decelerated from a 1.2% jump in January and a 0.5% increase in November 2010. Figures for both January and December were revised upwards. Previously, the increase in December was thought to be 0.4% and for January 1.0%. Meanwhile, the National Association of Realtors reported the Pending Home Sales Index had increased 2.1% to 90.8 in February. However, the bullish sentiment from these reports was short-lived as indices dropped into negative territory due to disappointing outlook from corporates and ensuing global concerns.

Marriott International, Inc.’s (NYSE:MAR) note of caution affected hotel stocks and was soon followed by a disappointing outlook from Halliburton. The oilfield services company said tensions in the Middle East and North Africa and sanctions imposed on Libya in particular will take first quarter earnings lower. Global issues, including the Japan nuclear crisis and violence in the Persian Gulf nations had a significant role to play for the disappointing corporate outlooks.

As Japan struggles its way out from the natural disasters of March 11, an earthquake measuring 6.5 on the Richter scale hit the nation on Monday. The nuclear crisis had earlier spread massive fears and many nuclear plants including the Fukushima Daiichi plant had to shut down, resulting in a significant drop in energy production. At a time with no further news of stabilization of the nuclear crisis, fresh reports of the leaking of contaminated water further deepened investor’ worries.

Violence in Libya continued as rebel forces took over important eastern oil towns and marched on to occupy embattled Libyan leader Muammar Gaddafi’s birth city. Crude oil prices retreated amidst the tension as rebels took the control of oil-rich ports of Ras Lanouf and Brega with the support of international military coalition forces. Rebels also promised to re-start the oil production in few weeks and there were no reports of any damage to the installations or the oil export terminals. In the meantime, NATO took over the responsibility for military actions in Libya against Gaddafi.

Following the reports, crude oil for May delivery on the New York Mercantile Exchange dropped 1.4% to settle at $103.98 per barrel. Upbeat comments from Schlumberger CEO, Andrew Gould, helped energy stocks move up. Analysts also estimated an increase in Saudi rig count and locked the upward movement of energy stocks. Stocks of Schlumberger Limited (NYSE:SLB), Halliburton Company (NYSE:HAL), Baker Hughes Incorporated (NYSE:BHI), Weatherford International Ltd. (NYSE:WFT) moved up by 4.1%, 4.0%, 3.8% and 1.8%, respectively.

The telecom industry was the only gainer in the S&P 500 after a broker upgrade of AT&T, Inc. (NYSE:T). The stock rose 1.8% and other gainers in the sector included Verizon Communications Inc. (NYSE:VZ), Alcatel-Lucent (NYSE:ALU) and Nokia Corporation (NYSE:NOK). The biggest laggards for the day included The Home Depot, Inc. (NYSE:HD) (2.1%), Walt Disney Co. (NYSE:DIS) (1.0%) and Microsoft Corporation (NASDAQ:MSFT) and they plunged 2.1%, 1.0% and 0.8%.

Stock Market News for March 29, 2011 – Market News

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