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A disappointing durable goods report and falling crude prices created enough selling pressure for the markets to fall yesterday. Declining crude prices crushed energy and commodity stocks, eventually dampening the overall sentiment. Experts also noted that the rush for buying stocks at the quarter end has somewhat faded. 

The Dow Jones Industrial Average (DJI) was down 0.5% and settled at 13,126.21. The Standard & Poor 500 (S&P 500) dropped 0.5% to close yesterday’s trading session at 1,405.54. The tech-laden Nasdaq Composite Index closed the day at 3,104.96, after losing 0.5%. The fear-gauge CBOE Volatility Index (VIX) remained almost flat, dropping a mere 0.12 points to settle at 15.47. Consolidated volumes on the New York Stock Exchange, Nasdaq and the Amex were 6.84 billion shares, marginally higher than the daily average volume of 6.83 billion. For 19 stocks that declined on the NYSE, 11 stocks managed to climb higher.

All of these benchmarks were down by almost the same percentage yesterday. Also, even though the indices have moved into the negative zone, the Dow, S&P 500 and Nasdaq are still hovering above their individual key levels of 13000, 1400, and 3000, respectively. The S&P 500 had dropped below 1, 400 during the last few trading sessions, but rebounded back to above 1400 this Monday following Ben Bernanke’s comments that economic growth is required for unemployment to decline appreciably.

While investors have been receiving encouraging domestic data since late-December, they have been deterred somewhat over the past couple of weeks by dismal housing data and a drop in consumer confidence that was reported on Tuesday. Yesterday too, economic data bogged down sentiment after the Commerce Department reported lower-than-expected increase in orders for new goods.

The U.S. Census Bureau announced a 2.2% increase in new orders for manufactured durable goods which came in at $211.8 billion for February. This jump comes after a 3.6% drop in January. Nonetheless, the increase was well below expectations and was a drag on the markets yesterday. Consensus estimates were hoping for a 2.8% increase. The Durable Goods Orders index is a major indicator of manufacturing sector trends as most industrial production is done on orders, and thus the trend reflected by the index plays a large role in markets’ direction.

Meanwhile, U.S. crude oil futures dropped sharply amidst news that he U.S. and Europe might release some oil reserves. The drop in crude prices dented the energy as well as the materials sector. The Energy Select Sector SPDR (XLE) was down 1.3% and stocks including Chevron Corporation (NYSE:CVX), ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO), Western Refining Inc. (NYSE:WNR) and Chesapeake Energy Corporation (NYSE:CHK) slumped 1.1%, 1.1%, 1.2%, 1.4% and 4.1%, respectively. As for the material sector, stocks like Alcoa, Inc. (NYSE:AA), AK Steel Holding Corporation (NYSE:AKS), Nucor Corporation (NYSE:NUE) and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) dropped 2.3%, 4.3%, 1.3% and 3.6%, respectively.

Some experts were of the view that the rush to stock up one’s portfolio ahead of the quarter end was fading. On Tuesday, a rush to buy certain preferred stocks had helped roughly 175 stocks to achieve 52-weeks highs. This included the likes of American Express Company (NYSE:AXP), The Coca-Cola Company (NYSE:KO), The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), International Business Machines (NYSE:IBM), Lockheed Martin Corporation (NYSE:LMT) and Western Digital Corporation (NYSE:WDC).

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