Stock Market News for July 6, 2012 - Market News
06 Julho 2012 - 6:06AM
Zacks
Interest rate cuts in China and the
Euro zone and monetary policy measures by The Bank of England were
of no help to the US markets on Thursday. Investors’ fears of
lingering global financial woes and a dismal domestic services
sector reading dragged the benchmarks down. Separately, initial
claims showed signs of decline while the ADP report added
more-than-expected jobs. However, expectations from US nonfarm
payrolls, slated for release on Friday, were anything but
optimistic.
The Dow Jones Industrial Average
(DJI) slipped 0.4% and closed at 12,896.67. The Standard & Poor
500 (S&P 500) was down 0.5% and finished yesterday’s trading
session at 1,367.58. The tech-laden Nasdaq Composite Index added a
negligible 0.03 points to finish at 2,976.12, close to the level it
started the day with. The fear-gauge CBOE Volatility Index (VIX)
moved up 5.0% and settled at 17.50. Volumes were once again low as
consolidated volumes on the New York Stock Exchange, the American
Stock Exchange and Nasdaq amounted to roughly 5.19 billion shares,
sharply lower than last year's daily average of 7.84 billion.
Decliners outnumbered advancing stocks on the NYSE; as for 54%
stocks that declined, 42% stocks moved up.
While domestic investors’ hopes for
a third round of quantitative easing remained afloat, central banks
in Europe and China stepped up measures, but both these
developments failed to excite investors. The European Central Bank
slashed interest rates to a record low of 0.75%, while the deposit
rate was brought down to zero. However, the rate-cut action was
followed by grim comments by ECB President Mario Draghi, which
weighed on the investors’ minds. Draghi said: "The risks
surrounding the economic outlook for the euro area continue to be
on the downside…Beyond the short term, we expect the euro area
economy to recover gradually, although with momentum dampened by a
number of factors. In particular, tensions in some euro area
sovereign debt markets and their impact on credit conditions”.
Separately, in a move aimed at
supporting the ailing Chinese economy, People's Bank of China
announced a 31-basis point cut to the nation’s benchmark lending
rate, which slipped to 6%. Deposit rates were also slashed by 25
basis points and declined to 3%. The Chinese central bank had cut
the rates earlier this year as well, on June 7. Thus, this decision
marks the second such cut in two months. The rate cuts will be
effective from Friday. Amidst these rate cuts, the Bank of England
did not follow the same route, but announced a £50 billion
expansion of its quantitative easing plan.
Despite the actions by these
central banks, investors hardly found any reason for cheer as their
fears about global financial woes remained intact. Mario Draghi’s
comments, as mentioned earlier, added to the gloom. Things were not
too bright on the home front either, as economic activity in the
non-manufacturing sector was slower-than-expected and was also at
the lowest level since January 2012. According to the Institute for
Supply Management’s Non-Manufacturing Business Survey Committee:
"The NMI registered 52.1 percent in June, 1.6 percentage points
lower than the 53.7 percent registered in May…The Non-Manufacturing
Business Activity Index registered 51.7 percent, which is 3.9
percentage points lower than the 55.6 percent reported in May”. The
growth in NMI also fell short of consensus estimates of a growth
rate of 52.8%.
However, jobs data came in positive
yesterday as initial claims dropped and Automatic Data Processing,
Inc.’s (NASDAQ:ADP) National Employment Report suggested job
additions in June. Looking at the initial claims data, the U.S.
Department of Labor reported that the advance figure for seasonally
adjusted initial claims dropped to 374,000, down 14,000 from the
prior-week's revised figure of 388,000. The drop was larger than
expected, as consensus estimates expected initial claims to be
recorded at around 385, 000. As for the ADP report, it noted:
“Employment in the U.S. nonfarm private business sector increased
by 176,000 from May to June, on a seasonally adjusted basis. The
estimated gain from April to May was revised up slightly, from the
initial estimate of 133,000 to a revised estimate of 136,000”.
Both the jobs reports were positive
and they come ahead of crucial nonfarm payroll data to be released
by the U.S. government. However, while reported figures were
better-than-expected, market analysts are remain wary of the
pending nonfarm data. Expectations are that payroll data would show
an addition of 100,000 jobs, up from 77,000 in April and 69,000 in
May. However, the unemployment rate will still linger around 8.2%,
and thus investors did not find any reason for cheer.
Additionally, yesterday, retail
chains came out with their reports on June sales, which were
largely discouraging. These included the likes of Costco Wholesale
Corporation (NASDAQ:COST), Target Corporation (NYSE:TGT) and The
Buckle, Inc. (NYSE:BKE) and their shares dropped 0.4%, 1.1% and
3.0%, respectively. Macy's, Inc. (NYSE:M), Kohl's Corporation
(NYSE:KSS) and The Wet Seal, Inc. (NASDAQ:WTSLA) also reported
dismal June sales, but their shares gained 2.7%, 6.3% and 4.4%,
respectively.
AUTOMATIC DATA (ADP): Free Stock Analysis Report
BUCKLE INC (BKE): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis Report
KOHLS CORP (KSS): Free Stock Analysis Report
MACYS INC (M): Free Stock Analysis Report
TARGET CORP (TGT): Free Stock Analysis Report
WET SEAL INC -A (WTSLA): Free Stock Analysis Report
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