Markets incurred losses for the seventh consecutive time after the European debt crisis in sight weighed down investor sentiment on Friday. Benchmarks not only logged their worst weekly performance in two weeks, but also suffered the worst Thanksgiving week since 1932. Earlier, markets had been trading higher spurred by hopes of the “Black Friday” syndrome.
The Dow Jones Industrial Average (DJIA) shed 0.2% to finish the day at 11,231.78. The Standard & Poor 500 (S&P 500) was down to 1,158.67, slipping 0.3%. The Nasdaq Composite Index ended trading on Friday at 2,441.51, after losing 0.8%. The fear-gauge CBOE Volatility Index (VIX) edged up to hover over 34. Markets remaining closed on Thursday because of the Thanksgiving Day holiday. On Friday, trading was closed at 1 p.m. on Friday, being “Black Friday”. Historically, volumes have always remained low on the day after Thanksgiving, and only 3 billion shares changed hands on the New York Stock Exchange, Amex and Nasdaq. These were the lowest volumes since November 26 last year, which was also the day after Thanksgiving. Advancers were outnumbered by the decliners on the NYSE and the advance decline ratio was 1,280 to 1,661
While the losing streak continued into the seventh day, mentioning a mere weekly drop would be undermining the slump the benchmarks have been suffering. Benchmarks logged their worst Thanksgiving week since 1932. In what was also the markets worst weekly performance in two months, the Dow, S&P 500 and the Nasdaq plunged 4.8%, 4.7% and 5.1%, respectively. The European debt crisis is a constant overhang on the domestic markets, denting the benchmarks on more occasions than it has done any good.
In the latest addition to the worrying headlines from Europe, Belgium joined the league of euro-zone nations to suffer a downgrade as "protracted political uncertainty" and receding economic conditions compelled Standard & Poor's to cut the nation’s long-term sovereign-credit rating by a notch. The rating agency chopped the rating down from AA-plus to AA. S&P stated: “We think the Belgian government's capacity to prevent an increase in general government debt, which we consider to be already at high levels, is being constrained by rapid private sector deleveraging both in Belgium and among many of Belgium's key trading partners".
Meanwhile, as incremental borrowing costs of the European nations continued to plague the domestic markets, the Italian 10-year yield moved up once again to hover over 7%. The Spanish 10-year yield is also in close range, with bigger economies like France and Germany also suffering from higher borrowing costs.
Markets were trading higher on Friday with hopes of the retailers cashing in on the profits from heavy shopping on Black Friday. However, with 20 minutes to spare, the benchmarks turned red, with European headlines once again running the mood. The retail sector did not enjoy gains on Friday with SPDR S&P Retail (XRT) dropping almost 1%. Retailers like J. C. Penney Company, Inc. (NYSE:JCP), Sears Holdings Corporation (NASDAQ:SHLD), Bon-Ton Stores Inc. (NASDAQ:BONT), Dillard's Inc. (NYSE:DDS) and Nordstrom Inc. (NYSE:JWN) plunged 0.9%, 1.3%, 6.2%, 0.8% and 1.0%, respectively.