Amidst the absence of any positive catalysts, disappointing consumer confidence data dragged the benchmarks marginally lower on Tuesday. The decline came just a day after Ben Bernanke’s comments had helped benchmarks gain at least 1.2%. Markets have performed significantly better so far this year, thus setting the tone for a positive finish in the first quarter.
The Dow Jones Industrial Average (DJI) edged down 0.3% to settle at 13,197.73. The Standard & Poor 500 (S&P 500) declined modestly, by 0.3% to finish yesterday’s trading session at 1,412.52. The tech-laden Nasdaq Composite Index dropped only 2.2 points or 0.07% to close almost unchanged at 3,120.35. The fear-gauge CBOE Volatility Index (VIX) surged 9.3% and settled at 15.59. Consolidated volumes on the New York Stock Exchange, Nasdaq and Amex were 6.07 billion shares, lower than this year’s daily average of 6.83 billion. On the NYSE, decliners outnumbered the advancers by a ratio of 4:3.
While Apple Inc. (NASDAQ:AAPL) hit an all-time high, closing at $614.48, a whopping 175 stocks trading on the NYSE jumped to their 52-weeks highs. This included the likes of Abbott Laboratories (NYSE:ABT), American Express Company (NYSE:AXP), Big Lots, Inc. (NYSE:BIG), The Coca-Cola Company (NYSE:KO), The Walt Disney Company (NYSE:DIS), EMC Corporation (NYSE:EMC), Fortune Brands Home & Security (NYSE:FBHS), The Home Depot, Inc. (NYSE:HD), International Business Machines (NYSE:IBM), Lockheed Martin Corporation (NYSE:LMT), Lowe's Companies, Inc. (NYSE:LOW), Pfizer, Inc. (NYSE:PFE) and Western Digital Corporation (NYSE:WDC) and they hit 52-week highs of $61.49, $59.18, $47.22, $71.98, $44.50, $29.79, $21.95, $50.35, $208.66, $91.09, $31.49, $22.80 and $43.10, respectively.
However, many of these stocks had to settle in negative territory for the day, after dismal consumer reading dented sentiment. The Conference Board reported that the Consumer Confidence Index had dropped to 70.2 from 71.6 in February. The Present Situation Index, moved up sharply to 51.0 from 46.4. Lynn Franco, Director of The Conference Board Consumer Research Center, said: "Consumer Confidence pulled back slightly in March, after rising sharply in February. The moderate decline was due solely to a less favorable short-term outlook, while consumers’ assessment of current conditions, on the other hand, continued to improve”. As for the Present Situation Index, he said: “… despite this month's dip in confidence, consumers feels the economy is not losing momentum".
Consumer data was an instant drag on the benchmarks. Tuesday’s drop came just a day after when the benchmarks witnessed robust increases, following Ben Bernanke’s comments regarding the need for economic support to help drive unemployment lower. In his speech at the National Association for Business Economics on Monday, Bernanke had said: "Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies”. Investors believe that a third round of bond buying might be in the offing, and the benchmarks jumped accordingly. Yesterday, in an interview to a news house, the central bank chairman said that possibilities of quantitative easing could not be ruled out.
Markets have enjoyed a strong run so far this year and till yesterday the Dow, S&P 500 and Nasdaq are up 8.0%, 12.3% and 19.8%. Once again it is evident the Nasdaq has enjoyed most of the gains and outperformed the other two. With such decent gains for 2012, investors would be further buoyed if the benchmarks achieve a robust quarterly finish this Friday. Economic data has come in strong this quarter and the labor market in particular has showcased a consistent strong performance. Housing data has also mostly been on the positive side and a green finish for the quarter would encourage investors’ belief in brighter economic prospects.