Market Commentary and Intraday News

Stocks Close Mostly Lower Amid Lingering Europe Worries - U.S. Commentary

237 days ago

(RTTNews) - Stocks saw considerable weakness during trading on Wednesday, adding to the steep losses posted in the previous session. Lingering concerns about the financial situation in Europe continued to weigh on the markets along with a negative reaction to U.S. housing data.

The major averages ended the day firmly in negative territory, although the Dow posted a relatively modest loss. The Dow slipped 44.04 points or 0.3 percent to 13,413.51, while the Nasdaq fell 24.03 points or 0.8 percent to 3,093.70 and the S&P 500 slid 8.27 points or 0.6 percent to 1,433.32.

The weakness on Wall Street came amid continued worries about the ongoing European debt crisis, with traders keeping a close eye on protests in the debt-plagued nations of Spain and Greece.

With the yield on Spain's ten-year bond climbing above 6 percent, the country seems increasingly likely to seek a bailout despite the widespread public protests against austerity measures.

Adding to the concerns about Europe, German newspaper Bild reported that Bundesbank is preparing a lawsuit against the European Central Bank claiming that the central bank is overstepping its mandate in launching the latest round of bond purchases.

Traders also reacted negatively to a report from the Commerce Department that unexpectedly showed a modest decrease by U.S. new home sales.

The Commerce Department said new home sales edged down 0.3 percent to a seasonally adjusted annual rate of 373,000 in August from the revised July rate of 374,000. Economists had expected new home sales to climb to an annual rate of 380,000 from the 372,000 rate originally reported for the previous month.

At the same time, the report also showed a notable increase in home prices, with the median sales price of new houses sold in August coming in at $256,900, up 11.2 percent from July. The median price represented a five-year high.

Among individual stocks, shares of Jabil Circuit (JBL) came under pressure after the electronic manufacturing services provider reported weaker than expected fourth quarter earnings and provided disappointing guidance. Jabil fell 9.9 percent to a two-month closing low.

Yahoo (YHOO) saw more modest weakness after the online media giant said Ken Goldman will join the company as chief financial officer, effective October 22nd. Goldman will succeed Tim Morse, who has been with Yahoo since June of 2009.

Meanwhile, shares of Copart (CPRT) moved the upside after the online auctions and vehicle remarketing services provider reported fourth quarter earnings and revenues that exceeded analyst estimates.

Sector News

With traders reacting negatively to the new home sales report, housing stocks turned in some of the market's worst performances. The Philadelphia Housing Sector Index fell by 3 percent, pulling back further off the nearly five-year closing high set last Friday.

M/I Homes (MHO) and Meritage Homes (MTH) posted particularly steep losses within the housing sector, tumbling by 8 percent and 7.3 percent, respectively.

Oil service stocks also moved sharply lower over the course of the trading day, dragging the Philadelphia Oil Service Index down by 2 percent. The weakness in the sector came as the price of crude oil extended a recent downward move, closing below $90 a barrel.

Significant weakness was also visible among electronic storage stocks, as reflected by the 1.6 percent loss posted by the NYSE Arca Disk Drive Index.

Networking, software, and biotechnology stocks also posted notable losses on the day, while tobacco and trucking stocks bucked the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region saw notable weakness during trading on Wednesday. Japan's Nikkei 225 Index plummeted by 2 percent, while Hong Kong's Hang Seng Index ended the day down by 0.8 percent.

The major European markets also showed substantial moves to the downside on the day. While the U.K.'s FTSE 100 Index fell by 1.6 percent, the German DAX Index tumbled by 2 percent and the French CAC 40 Index plunged by 2.8 percent.

In the bond market, treasuries showed a strong upward move, extending a recent winning streak. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.4 basis points to 1.618 percent.

Looking Ahead

While developments in Europe are likely to remain in focus on Thursday, trading could also be impacted by the release of a slew of U.S. economic data, including reports on weekly jobless claims, durable goods orders, and pending home sales.

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