Stock Market News for May 16, 2011 - Market News

Concerns about the euro-zone debt crisis seeped into the US markets to take the benchmarks lower on Friday, as indices ignored positive domestic data. Financials suffered a heavy blow and the week, which saw highly volatile commodity trading, closed with indices in negative territory.

The Dow Jones Industrial Average (DJIA) dropped 0.8% and settled at 12,595.75. The Standard & Poor 500 (S&P 500) also shed 0.8% to close at 1,337.77. The Nasdaq Composite Index finished the day at 2,828.47 after losing 1.2%. The fear-gauge CBOE Volatility Index (VIX) increased 6.6% to 17.09. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes were at 6.88 billion shares, lower than the average of 7.73 billion shares recorded till now in 2011. On the NYSE, for seven stocks that advanced, three stocks moved lower. The lackluster week of trading failed to provide any positive impetus to the indices as they closed lower for the week. The Dow, S&P 500 and the Nasdaq shed 0.3%, 0.2% and 0.03%, respectively.

Investors’ sentiments were bogged down by concerns arising out of Greece’s debt problems. As worries begin to deepen over the debt crisis, the finance minister of the country, George Papaconstantinou said the nation does not plan to restructure its debt. However, it was reported that he had earlier sought an extension for the repayment period and a reduction on the interest to be paid on the $160 billion loan from the International Monetary Fund and European Union. Concerns about Greek debt is expected to be form the core of the discussion as IMF and European officials come together in Brussels. Meanwhile, a German newspaper reported that the European Central Bank and France were against the extension, while IMF, Germany and European Commission were favoring such a decision. Additionally, the European Commission mentioned that Greece’s economy will likely reduce more than what was expected earlier in the year.

Through the week, commodities have swung up and down and have subsequently moved the markets. With the lack of any major news and the earnings season nearing its end, commodities were primarily responsible for the gains and the losses. On Friday, light crude oil for June delivery was up 0.7% and settled at $99.65 per barrel. Crude had slipped 1% in intra-day trading. Gold futures shed 0.9% and silver gained 0.6% to settle at $1,494.20 an ounce and $35.01 an ounce, respectively.

Positive economic data came in on Friday, but the investors who were bogged down by the euro-zone crisis, chose to ignore these encouraging signs. According to the University of Michigan-Thomson Reuters index, consumer sentiment jumped to 72.4 in May from 69.8 in the previous month. This also marked a three-month high for the index which surpassed the economists’ expectations of the index touching 71.0. While the report suggested an improving jobs scenario had overshadowed the adverse effects of higher gasoline prices, Osama bin Laden’s death failed to have any effect on the index. Also, consumer expectation topped projections of 61.8 and reached 67.4, up from 61.6 in April.

Separately, the Labor Department reported a 0.4% jump in the Consumer Price Index for April. Higher energy prices were the primary driving force behind rising prices and recorded a surge of 3.2% from last year. Food prices slowed down their pace of increase, rising only 0.4% in April, versus an increase of 0.8% in March. Excluding the food and energy, the consumer price index jumped 0.2%.

Financials were among the leading decliners and were affected by fresh euro-zone debt fears. The Financial Select Sector SPDR fund was down 1.4% and the S&P financial index was down 1.3%. Among these stocks, The Goldman Sachs Group, Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), Morgan Stanley (NYSE:MS), Bank of America Corporation (NYSE:BAC) and Citigroup, Inc. (NYSE:C) dropped 0.9%, 2.1%, 1.1%, 1.6%, 2.2% and 2.1%, respectively.

Technology stocks were also among the losers and shares like Google Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), Amazon.com Inc. (NASDAQ:AMZN) and Yahoo! Inc. (NASDAQ:YHOO) shed 1.0%, 1.8%, 1.7% and 3.6%.

Stock Market News for May 16, 2011 – Market News

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