Stock Market News for October 3, 2012

Benchmarks ended mixed yesterday after a favorable housing report countered apprehensions about the Spanish bailout. Uncertainty about when Spain would seek a bailout was a matter of concern. Also, a decline in the materials sector restricted markets’ gains.

The Dow Jones Industrial Average (DJI) lost 0.2% and closed at 13,482.36. The Standard & Poor 500 (S&P 500) gained a mere 1.26 points or 0.1% and finished yesterday’s trading session at 1,445.75. The tech-laden Nasdaq Composite Index closed at 3,120.04, after rising 0.2%. The fear-gauge CBOE Volatility Index (VIX) shed 3.7% to settle at 15.71. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and the Nasdaq were roughly 5.7 billion shares, lower than the year-on-year daily average volume of 6.38 billion. The advancers on the New York Stock Exchange outpaced the declining stocks; as for 51% stocks that gained, 45% stocks closed lower.

It was the uncertainty about when Spain would ask for a bailout package that left the benchmarks mostly static. European Officials told Reuters that Spain will ask for a bailout next weekend. Moreover, an official hinted that German has urged Spain to hold back the bailout request. However, Spain’s Prime Minister, Mariano Rajoy, said the bailout ‘was not imminent’. To add to the apprehensions, he said: “If a news agency reports that we'll ask for aid this weekend, there can only be two explanations; that the agency is right, and knows more than I do, which is possible, or that they are not right”.

Separately, ratings agency Moody’s continued its review of Spain’s sovereign rating. A spokeswoman for the ratings agency said:“Moody's review of Spain's rating is continuing to assess a number of factors, including Spanish banks' capital needs, the nature and size of support mechanisms, the recently released 2013 budget plan and the consequences for the euro area's crisis management framework of the further advancement of a banking union“. Earlier in September, Standard & Poor's ratings chief for Europe, Africa and the Middle East said that since the European Central Bank might help Spain to overcome its debt crisis, it would not downgrade the country into ‘junk’ status in the near future.

Real estate data provider Corelogic Inc. (NYSE:CLGX) reported yesterday that U.S. home prices rose for the sixth consecutive month in August. The company’s home price index increased 0.3% in August from the prior month. Also, the 4.6% year-on-year jump was the best since July 2006. Further, excluding distress sales, home prices might go up 0.6% in September and 6.3% on a year-on-year basis.

The encouraging housing data subsequently boosted housing stocks. The SPDR S&P Homebuilders (XHB) jumped 0.5% and stocks including M.D.C. Holdings, Inc. (NYSE:MDC), KB Home (NYSE:KBH), PulteGroup, Inc. (NYSE:PHM), Hovnanian Enterprises Inc. (NYSE:HOV) and Toll Brothers Inc. (NYSE:TOL) soared 1.8%, 1.7%, 1.6%, 1.2% and 0.8%, respectively.

Meanwhile, shares of PetSmart, Inc. (NASDAQ:PETM) gained 1.5% to end at $68.55 yesterday, a day after S&P Dow Jones Indices announced that Sunoco, Inc. (NYSE:SUN) will be replaced by PetSmart in the S&P 500 list with effect from October 4. Separately, fertilizer manufacturer Mosaic Co. (NYSE:MOS) reported lower than expected first quarter results as lower demand from China and India dented its profits. Consequently, its shares dropped 3.9% and closed at $55.76.

The materials sector was the major loser yesterday and Materials Select Sector SPDR (XLB) plunged 0.5% and stocks including FMC Corporation (NYSE:FMC), E I Du Pont De Nemours And Co. (NYSE:DD), Eastman Chemical Company (NYSE:EMN), PPG Industries, Inc. (NYSE:PPG) and The Dow Chemical Company (NYSE:DOW) lost 1.8%, 1.7%, 0.8%, 0.8% and 0.5%, respectively.