Stock Market News for April 20, 2012

Strong earnings results from financial bellwethers came of no help to the markets, as dismal economic data and concerns from cross-Atlantic territory washed out the positives and dragged the benchmarks down. It was the markets’ second fall in a row. Rumors of Fitch Ratings downgrading France’s sovereign rating affected investor sentiment, but the rumors were later denied. However, European concerns still prevailed with surging borrowing costs of Spain.

The Dow Jones Industrial Average (DJI) dropped 0.5% to settle at 12,964.10. The Standard & Poor 500 (S&P 500) slumped 0.6% and finished yesterday’s trading session at 1,376.92. The tech-laden Nasdaq Composite Index sustained its key level, but was the biggest loser among the benchmarks yesterday and was down 0.8% to close at 3,007.56. The fear-gauge CBOE Volatility Index dropped 1.5% to settle at 18.36. Consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were roughly 7.43 billion shares, higher than this year’s average of 6.78 billion shares. On the NYSE, the declining stocks outpaced the advancing ones by a ratio of 7:5.

Looking at the blue-chip index, General Electric Company (NYSE:GE), The Travelers Companies, Inc. (NYSE:TRV) and Verizon Communications Inc. (NYSE:VZ) were the only ones among the 30 Dow components that managed to end in the positive zone and they gained 0.2%, 3.8% and 1.3%, respectively. Meanwhile, while the markets suffered its second decline in two sessions, the Dow once again dropped below its key level of 13, 000. Tryst with key levels is not anything unique with Dow, as fellow benchmarks S&P 500 and Nasdaq too have moved up and down their individual key levels. For now, S&P 500 remains well below its key level of 1, 400, and Nasdaq is just 7.56 above 3, 000.

The second day of decline did obviously dampen the benchmarks’ weekly run. However, while the Dow and S&P 500 still have gains of 0.9% and 0.5%, respectively, the Nasdaq is down 0.1% so far this week. We noticed this very week how movement in Apple Inc. (NASDAQ:AAPL) guided the Nasdaq’s ups and downs. Apple, the most valuable company in the world, is Nasdaq’s biggest component with 12% holding. Apple dropped 3.4% yesterday, making a significant dent to the tech-laden index. Nasdaq’s other key components, Microsoft Corporation (NASADQ:MSFT), Google Inc. (NASDAQ:GOOG), Oracle Corporation (NASDAQ:ORCL), Intel Corporation (NASDAQ:INTC) and Cisco Systems, Inc. (NASDAQ:CSCO) dropped 0.4%, 1.3%, 0.4%, 0.9% and 0.8%, respectively.

Another Nasdaq component, QUALCOMM Incorporated (NASDAQ:QCOM) ended up being one of the biggest losers among the tech sphere. The chipmaker slumped 6.6% after providing a weak guidance for the remaining 2012, bogged down by issues of manufacturing shortage of its chipset. No matter the company managed to beat estimates, the soft outlook undid all the positives and the shares slumped.

Incidentally, looking at the broader markets, earnings beat from Morgan Stanley (NYSE:MS) and Bank of America Corp (NYSE:BAC) hardly helped the markets to end in the green as other concerns took over. Both these companies are financial bellwethers, and strong results from them usually should lift the sentiment. However, including certain nonrecurring items, BofA’s earnings per share failed to beat the estimates.

Yesterday, markets had to deal with concerns both at the domestic front as well as from European region. As for the domestic issues, lower-than-expected data on the labor front and manufacturing activity in the Philadelphia region were the prime headwinds. The U.S. Department of Labor reported that the advance figure for seasonally adjusted initial claims dropped 2,000 to 386,000, for the week ending April 14, down from the previous week's revised figure of 388,000. This mere drop was too weak in face of consensus estimates’ of initial claims recording a figure of 370, 000.

Separately, manufacturing activity in Philadelphia region was at a modest pace and was shy of estimates. According to the report: “The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, edged down from a reading of 12.5 in March to 8.5”. The consensus predictions had expected a reading of 12.8.

European concerns are a constant bother for the US markets and yet again the benchmarks had to suffer losses. The cross-Atlantic tension was sparked by rumors of Fitch Ratings downgrading France’s sovereign rating. The rumors were later denied. Separately, Spain’s 10-year government bonds yields jumped to 5.92% as investors remained unsure about the nation’s ability of tackling fiscal headwinds.