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Stock Market News for March 25, 2014

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Benchmarks ended lower on Monday dented by escalating tension over Crimea and another drop in the bio-tech stocks for the second straight day. Investors’ confidence further dipped over growing concerns about China’s economy. The day’s encouraging domestic economic numbers failed to avoid the losses.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) dropped 0.2% to close Monday’s trading session at 16,276.69. The Standard & Poor (S&P 500) fell 0.5% to finish at 1,857.44. The tech-laden Nasdaq Composite Index plunged 1.2% to 4,226.39. The fear-gauge CBOE Volatility Index (VIX) moved up 0.6% to settle at 15.09. Total volume on the New York Stock Exchange was 3.4 billion shares. Advancing stocks were outnumbered by declining stocks on the NYSE. For 36% stocks that advanced, 61% declined.
Markets slipped on Monday as growing political tension between Russia and the West over Crimea kept the mood jittery. On Monday, Ukraine ordered its troops to evacuate Crimea. Last week, Russian forces had already seized two Ukrainian naval bases; including the Crimean port of Sevastopol after Russian President Vladimir Putin signed the treaty for annexing Crimea.
The U.S President Barack Obama opposed this move and began talks with European allies on ways to counter what is seen as the biggest East-West conflict since the Cold War. Last week, he had declared sanctions on a Russian bank and prominent Russian officials, including close allies of Putin. Also, he approved possible future sanctions on Russian financial services, defense and energy sectors.
Shares of bio-tech companies dropped for the second trading session in a row. On Friday, bio-tech companies were affected after Democrats on the U.S. House Energy & Commerce Committee asked Gilead Sciences Inc. (NASDAQ:GILD) to justify the $84,000 price tag on its new hepatitis C drug Sovaldi.
The Health Care Select Sector SPDR (XLV) led the decline among the S&P 500 sectors as the sector fell 1.1%. Key stocks from the sector such as Johnson & Johnson (NYSE:JNJ), Pfizer Inc. (NYSE:PFE), Merck & Co. Inc. (NYSE:MRK), Amgen Inc. (NASDAQ:AMGN) and Bristol-Myers Squibb Company (NYSE:BMY) fell 0.8%, 2.1%, 1.6%, 1.3% and 1.9%, respectively.
Dismal data from China also weighed heavily on the benchmarks. The initial or “flash” Markit/HSBC Purchasing Managers’ Index fell to an eight month low of 48.1 in March from 48.5 in February, indicating a possible decline in China’s manufacturing activity for the third straight month.
Earlier reports of larger-than-expected decline in Chinese exports had raised concerns of a slowdown in the world’s second-largest economy. The anxiety further intensified after the Chinese government reported lower-than-expected yearly increases in industrial production, fixed asset investment and retail sales of 8.6%, 17.9% and 11.8%, short of analysts’ expectations of a rise by 9.5%, 19.4% and 13.5%, respectively.
On the economic front, the preliminary Markit US flash purchasing managers index slipped to 55.5 in March from 57.1 in February. However, manufacturers remain assured that the reading is above the key level of 50, indicating growth. The warm weather was cited to be the reason for the robust Markit readings for the last two months.
Nine out of ten sectors of the S&P 500 ended in the red. The Consumer Discretionary sector followed the Health Care sector. The Consumer Discret Select Sector SPDR (XLY) decreased 1%. Major stocks from the sector such as Inc. (NASDAQ:AMZN), The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), Incorporated (NASDAQ:PCLN) and Twenty-First Century Fox, Inc. (NASDAQ:FOXA) slipped 2.4%, 1.1%, 0.9%, 3.2% and 1.4%, respectively.

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