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Stock Market News for March 24, 2011
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ShareMaterials stocks took the markets modestly ahead over hopes of rebuilding after an earthquake and tsunami ravaged Japan. Weak US new home sales data took the markets to session lows during the day before rebuilding hopes pumped in modest momentum. However, the day saw very tight volumes, reflecting investors’ concern over global worries and bank-dividend disappointment.
After trading in the negative zone during the early session, the Dow Jones Industrial Average finally gained 0.6% and closed the day at 12,086.02. The Standard & Poor 500 was up 0.3% and finished at 1,297.54. The Nasdaq Composite Index closed at 2,698.30 after surging 0.5%. Wednesday was one of the lightest days in terms of trading volumes on the New York Stock Exchange with composite volumes at a mere 3.9 billion shares. On NYSE, AMEX and Nasdaq the consolidated volumes were 7.01 billion shares well below the daily average of 8.07 billion. Advancers outnumbered the decliners by 1,635 to 1,325 on the NYSE. The fear-gauge CBOE Volatility Index (VIX) dropped to nearly 19.
The S&P Index for materials stocks was the top performing sector in the S&P 500 and surged a significant 1.4%. The rally began after the Japanese cabinet estimated natural disasters would cost the country a hefty $309 billion, double the cost of the Kobe earthquake in 1995. The increase in the materials sector was in sync with metal prices, which surged 2%. Thus, the economic stimulus that the Bank of Japan and the government will pump in opens up opportunities for a few sectors to cash in. Most prominently, the reconstruction cost would act as a boon for materials like aluminum, steel and copper. Basic materials led the upward movement and with a gain of 3.0%, Alcoa, Inc. (NYSE:AA - Analyst Report) posted the highest increase in the Dow. Among other stocks Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX - Analyst Report), Newmont Mining Corp. (NYSE:NEM - Analyst Report), United States Steel Corp. (NYSE:X - Analyst Report) and AK Steel Holding Corporation (NYSE:AKS - Analyst Report) gained 5.0%, 3.1%, 1.4% and 1.8%, respectively. Gold prices surged to new highs since early March and settled at $1,438 an ounce while silver prices at $37.198 an ounce posted a 31-year high. Shares of Silver Wheaton Corp. (NYSE:SLW - Snapshot Report), AngloGold Ashanti Ltd. (NYSE:AU - Snapshot Report) and Barrick Gold Corporation (NYSE:ABX - Analyst Report) jumped 5.6%, 2.7% and 3.6%, respectively.
Ensuing unrest in Libya continued as Libyan leader Muammar Gaddafi clung on to fight against international military coalition forces. Before the crisis, the country accounted for 2% of global daily output of crude and the intensifying violence is incrementally adding to supply woes of oil. On Wednesday, US gasoline supplies dropped more than expected and crude prices for April delivery hovered over $105 per barrel. The NYSE Arca Oil index and The Philadelphia Oil Service index surged 0.4% and 0.1%, respectively, while the NYSE Arca Natural Gas index dropped marginally. The crisis in Japan will also helped energy stocks as the country is likely in need of natural gas and oil for electricity production. Shares of Valero Energy Corp. (NYSE:VLO - Analyst Report) (2.6%) and Exxon Mobil Corp. (NYSE:XOM - Analyst Report) (0.1%) jumped 2.6% and 0.1%. ConocoPhillips (NYSE:COP - Analyst Report) rose 1.7% after the company disclosed plans to boost production by 2%-3% and sell off an additional $5-$10 billion of non-core assets.
Also in global news, Portugal’s parliament rejected austerity measures and opened up chances of seeking an international bail-out. Portugal’s prime minister, Jose Socrates resigned in the aftermath of the voting and said: "Today every opposition party rejected the measures proposed by the government to prevent Portugal being forced to resort to external aid". The incident once again sheds light on concerns over the European economy and is likely to force Portugal into a political crisis. Socrates further commented: "This crisis will have very serious consequences in terms of the confidence Portugal needs to enjoy with institutions and financial markets".
Moving to the domestic arena, all the news and data only provided a gloomy outlook for investors. The Commerce Department reported a fall of 16.9% in the sales of new homes to a seasonally adjusted annual rate of 250,000 in February. On a year-over-year basis sales plunged 28%. This was the steepest single monthly decline since 1962. This development dented markets heavily during the early session and at a point had pulled the benchmarks to session lows. Shares like DR Horton Inc. (NYSE:DHI - Analyst Report) and Toll Brothers Inc. (NYSE:TOL - Snapshot Report) lost 0.5% and 1.0%.
According to a SEC filing, the Federal Reserve struck down Bank of America Corporation’s (NYSE:BAC - Analyst Report) decision to raise its dividend. Several big banks had announced their decision to increase their dividends a week after the Fed had conducted a stress test on 19 big banks. However, it seems BofA failed to pass the stress test and the bank is struggling to be profitable and has less capital at its disposal compared to its rivals. Shares of BofA slid 1.7% and settled at $13.60 at the end of the day. This also put pressure on the financial sector as a whole and the Financial Select Sector SPDR went down by 0.3%. Other bank shares that felt the burn included Citigroup, Inc. (NYSE:C - Analyst Report), Wells Fargo & Company (NYSE:WFC - Analyst Report) and The Goldman Sachs Group, Inc. (NYSE:GS - Analyst Report) and they shed 0.5%, 0.2% and 0.8%, respectively.
Read the full analyst report on AA
Read the full analyst report on FCX
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Read the full analyst report on X
Read the full analyst report on AKS
Read the full analyst report on SLW
Read the full analyst report on AU
Read the full analyst report on ABX
Read the full analyst report on VLO
Read the full analyst report on XOM
Read the full analyst report on COP
Read the full analyst report on DHI
Read the full analyst report on TOL
Read the full analyst report on BAC
Read the full analyst report on C
Read the full analyst report on WFC
Read the full analyst report on GS
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