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Stock Market News for August 29, 2014

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Markets ended in the red and the S&P fell below the record 2k mark as concerns about Russia-Ukraine tension overshadowed encouraging U.S. economic data. Dismal inflation rate data from Eurozone also dragged down the benchmarks.  

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) declined 0.3% to close at 17,079.57. The Standard & Poor 500 (S&P 500) decreased 0.2% to close at 1,996.74. The tech-laden Nasdaq Composite Index closed at 4,557.69; declining 0.3%. The fear-gauge CBOE Volatility Index (VIX) rose 2.3% to settle at 12.05. A total of 2.3 billion shares were traded in the NYSE on Thursday. Decliners outpaced advancing stocks on the NYSE. For 55% stocks that declined, 41% advanced.

On Thursday, Ukrainian President Petro Poroshenko accused Russia of sending troops into Ukraine in order to support the pro-Russian separatists in the eastern region. He said the situation is "rapidly deteriorating” as “Russian troops have actually been brought into Ukraine.” It was reported that the separatists have captured the town of Novoazovsk. Following such news, Ukrainian President reacted immediately and said conditions were "extraordinarily difficult...but controllable". The U.S. and the European Union decided to strengthen their sanctions further against Russia following this development. 

However, Moscow denied the accusation of sending troops and reportedly said: “The information contained in this material bears no relation to reality.”

Discouraging inflation data from the Eurozone also dented investor sentiment. Germany posted higher-than-expected unemployment rate in August with a dismal inflation rate of 0.8%. On the other hand, Spain saw annual deflation rate of 0.5% in August. Moreover, Belgium’s inflation rate reached 0.02%, the lowest level in about 5 years. Additionally, Eurozone’s inflation rate is expected to decline from 0.4% in July to almost 0.3% in August, much behind the ECB’s target of 2%.

Separately, the U.S. Department of Commerce reported Q2 GDP second estimate of 4.2%. This was higher than the consensus estimate of 3.9%, indicating an economic recovery.

The US Department of Labor reported initial claims declined to 298,000 for the week ending Aug 23 from 299,000 in the prior week. This was below consensus estimate of 301,000. Pending home sales number also came in positive. National Association of Realtors (NAR) reported sales rose 3.3% in July, easily beating consensus estimate of a 0.5% hike. However, these encouraging economic reports failed to lift the markets.

Shares of Abercrombie & Fitch Co. (ANF - Free Report) declined 4.8% after posting second quarter net sales of $890.6 million, declining 6% year over year. Moreover, quarterly revenues fell short of the Zacks Consensus Estimate of $917 million.

Williams-Sonoma Inc. (WSM - Free Report) forecasted third quarter earnings per share between 58 cents to 63 cents, missing the Zacks Consensus estimate of 65 cents. Shares of Williams-Sonoma plunged 12% yesterday following weak guidance.

However, Signet Jewelers Limited’s (SIG - Free Report) shares jumped 7.7% after reporting second quarter organic earnings per share of $1, rising 19% year on year.

The SPDR S&P Homebuilders (XHB) was the biggest loser among the S&P 500 sectors. The sector declined 0.9% yesterday. Key housing stocks from the sector such as PulteGroup, Inc. (PHM - Free Report) , KB Home (KBH - Free Report) , DR Horton Inc. (DHI - Free Report) and Beazer Homes USA Inc. (BZH - Free Report) rose 0.4%, 0.3%, 0.2% and 1%, respectively. Out of 10 S&P sectors, 6 sectors declined on Thursday.

Volumes were unexpectedly low during this week as some of the investors are in holiday mood ahead of the Labor Day. Markets will remain closed on Monday for Labor Day holiday.

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