This page is temporarily not available. Please check later as it should be available shortly. If you have any questions, please email customer support at email@example.com or call 800-767-3771 ext. 9339.
Benchmarks added paltry gains after English and French central banks suggested dire future prospects and domestic companies’ said European concerns were responsible for their dismal results. Meanwhile, German industrial production suffered a contraction. Nonetheless, the Dow and S&P 500 stretched their gains into a fourth-consecutive day, while the Nasdaq slipped into the red.
The Dow Jones Industrial Average (DJI) edged up by a mere 0.1% and closed at 13,175.64. The Standard & Poor 500’s (S&P 500) gain of 0.87 points or 0.1% left the benchmarks hardly changed at 1,402.22. The tech-laden Nasdaq Composite Index failed to finish in the green and dropped 0.2% to end at 3,011.25. The fear-gauge CBOE Volatility Index (VIX) was down 4.2% and settled at 15.32. Volumes remained light yet again as consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.72 billion shares, sharply lower than last year's daily average of 7.84 billion. Advancing stocks edged past the decliners on the NYSE; as for 49% stocks that gained, 47% stocks closed lower.
Markets opened in the red yesterday after investors received dismal headlines from Europe. While the Bank of England slashed Britain’s economic growth outlook, Bank of France warned of a recession befalling the nation in the third quarter. Coming to the details of the report, the Bank of England stated that Euro-zone debt worries are taking a severe toll and the central bank slashed their 2012 GDP growth estimates to “around zero” from estimates of a growth of 0.8%.
Governor Mervyn King said that “storm clouds continue to roll in from the euro area” and that they have affected growth prospects. With 22 gold medals in the kitty so far, Britain recorded its best Olympic display yesterday. However, King stated: "Unlike the Olympians who have thrilled us over the past fortnight, our economy has not yet reached full fitness. But it is slowly healing".
King warned that there may be negative news coming in, saying: "The overall outlook for growth is weaker than in May, reflecting downside news in the near term and, in the medium term, the possibility that the weakness in output and productivity growth that we have seen since the financial crisis persists.” Thus, with a reduction in the GDP estimate and expectations of almost zero growth, a rise in investors’ apprehensions was but natural.
Additionally, Bank of France warned that the French economy might be heading for a recession in the third quarter. The country’s GDP is estimated to shrink 0.1% in the third quarter from the second quarter. This first estimate for the third quarter of 2012 comes after previous projections of similar contraction in the second quarter. Thus, recession, which is generally defined as two consecutive quarters of contraction, may soon grip the French economy.
Separately, German’s industrial production dropped in June, suggesting the ill-effects of European debt woes. The Economy Ministry said industrial production declined to 0.9% in June from prior month. In May, industrial production had gained 1.7%. Further, the Federal Statistical Office noted that the country’s exports slumped to 1.5% in June from May. In contrast, exports had jumped 4.2% in May.
With many negatives coming out of the European continent, domestic companies also blamed the region for their dismal results. Shares of Priceline.com Inc (NASDAQ:PCLN) slumped 17.3% after revenues fell short of Street estimates. Further, the company also provided a dismal outlook. Investors were far from impressed with revenue growth, which was affected by lingering debt troubles in Europe. Another retailer, Ralph Lauren Corporation (NYSE:RL) said the dismal economic situation might reduce spending on clothes. The company anticipates a low-single-digit decline in wholesale sales. Subsequently, shares of Ralph Lauren dropped 1.1%.
Separately, July sales came in flat for the world's largest burger chain, McDonald's Corp.’s (NYSE:MCD); its worst performance of the company in nine years. The drop this time hinted that soft economic conditions were a major headwind and that is eventually affecting spending. Shares of MCD were down 1.7% yesterday. Meanwhile, Alpha Natural Resources, Inc. (NYSE:ANR) had to reduce 2012 metallurgical coal sales guidance owing to a slump in Europe’s steel output. The company’s shares plunged 8.7%.