Markets continued to stay in the red as concerns over oil supplies and mounting unrest in Libya further pushed up crude prices. To add to the woes of investors, the semiconductor index was downgraded which eventually led to technology stocks sliding lower.
The fear gauge CBOE Volatility Index (VIX) jumped 8.5% to 20.68 and consolidated volumes on Nasdaq, the New York Stock Exchange (NYSE) and AMEX was 7.92 billion shares, below the daily average of 8.47 billion for last year. The Dow Jones Industrial Average (DJIA) shed 0.7% to close at 12,090.03 and the Standard & Poor 500 ended at 1,310.13 after dropping 0.8%. The tech laden Nasdaq Composite Index was weighed down to 2,745.63 and dropped 1.4%. On the New York Stock Exchange advancers beat the decliners by a ratio of 3:1.
Loyalists of Libyan leader Muammar Gaddafi intensified their attacks as strikes continued over the weekend. On Monday, pro-Gaddafi forces launched an air attack against rebels in the coastal oil rich town of Ras Lanuf. The uprising which started in late-mid February has since spiked oil prices and dented the markets on a number of days. Rising crude prices also ensures inflated transportation and manufacturing costs. Surging crude prices have pushed up gasoline prices in the US with pump prices rising by an average of 39 cents per gallon. The spike in crude prices and unrest in the Gulf also weighed down the materials sector as copper suffered its biggest single day decline in roughly 4 months.
Crude prices topped a 2.5 year high, climbing to more than $105 per barrel on the New York Mercantile Exchange. Unrest in Libya, which accounts for 2% of the daily global output of crude, has created significant concerns for the global economy.The situation may turn for the worse hereafter, with the agitation spreading to Saudi Arabia, one of the richest oil producing countries. Researchers opine that crude prices can soar to $200 per barrel on such a scenario.
On a day with no positives to help markets ease off geopolitical tensions, the semiconductor sector was downgraded to “market weight”. Technology stocks slid lower following a downgrade by Wells Fargo which said the downgrade from “overweight” indicated a “moderate though still optimistic view”. One of the biggest laggards in the sector was CIENA Corp. (NASDAQ:CIEN), which shed 9.8% following a fiscal first quarter loss and below expectation revenue guidance for the quarter. Among other decliners were JDS Uniphase Corporation (NASDAQ:JDSU), Applied Materials, Inc. (NASDAQ:AMAT) and Advanced Micro Devices, Inc. (NYSE:AMD), which shed 6.9%, 4.6% and 4.2%, respectively. However, stocks of Western Digital Corp. (NYSE:WDC) gained 15.6% after it agreed to acquire the hard-disk drive unit of Hitachi Ltd. (NYSE:HIT).
Energy stocks were on the decline as US oil producers had to adhere to trade sanctions against Libya. Exxon Mobil Corp. (NYSE:XOM) and ConocoPhillips (NYSE:COP) and Morgan Stanley suspended oil trading with Libya, as part of a package of sanctions against the Libyan government. Shares of Exxon Mobil and ConocoPhilips shed 0.4% and 0.9% respectively. Financial stocks were also part of the laggards as shares like Janus Capital Group Inc. (NYSE:JNS), Hartford Financial Services Group Inc. (NYSE:HIG), Federated Investors, Inc. (NYSE:FII) and Fifth Third Bancorp (NASDAQ:FITB) declined 3.8%, 2.8%, 2.7% and 2.2%, respectively.
APPLD MATLS INC (AMAT): Free Stock Analysis Report
ADV MICRO DEV (AMD): Free Stock Analysis Report
CIENA CORP (CIEN): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
FEDERATED INVST (FII): Free Stock Analysis Report
FIFTH THIRD BK (FITB): Free Stock Analysis Report
HARTFORD FIN SV (HIG): Free Stock Analysis Report
HITACHI (HIT): Free Stock Analysis Report
JDS UNIPHASE CP (JDSU): Free Stock Analysis Report
JANUS CAP GRP (JNS): Free Stock Analysis Report
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EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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