Benchmarks finished mixed following weak international economic numbers which eclipsed encouraging reports of major acquisitions and improving job market. For the second consecutive day, the S&P 500 and the Nasdaq finished in the green, but only just. However, the Dow Jones finished in the red. The energy sector was the major gainer among the S&P 500 industry groups whereas the utilities sector was the biggest loser.
The Dow Jones Industrial Average (DJI) decreased 0.1% to close the day at 13,973.39. The S&P 500 increased marginally, by 0.1%, to finish yesterday’s trading session at 1,521.38. The tech-laden Nasdaq Composite Index gained 0.1% to end at 3,198.66. The fear-gauge CBOE Volatility Index (VIX) decreased 2.5% to settle at 12.66. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.36 billion shares, well below the daily average of 6.45 billion shares in 2012. Advancing and declining stocks closed at par, at 48% each.
Weak European economic data for fiscal 2012 was largely responsible for pushing the Dow into the red. Fresh concerns over the European economy arose after the euro zone’s GDP contracted by 0.5%, the highest in the last four years. This is comparable with the growth rate of U.S. and Japan, which stands at 2.2% and 1.9%, respectively. Among the major European economies, Germany grew at a pace of 0.9% while France and Italy declined by 2.2% and 1.4%, respectively. Japan’s economy contracted for the third quarter in a row, by 0.4% in annualized terms. However for fiscal 2012, GDP came in at 1.9%.
On the mergers & acquisitions front, Berkshire Hathaway Inc. (NYSE:BRK.B) and 3G Capital Inc. together bid to acquire food processing company H.J. Heinz Company (NYSE:HNZ) at $72.50 a share. This acquisition is inclusive of Heinz’s debt worth $28 billion. Following these developments, shares of Berkshire Hathaway increased 1.3% while shares of Heinz surged 20%.
According to the U.S. Department of Labor, the number of American citizens filing for unemployment claims decreased to 341,000, down 27,000 from the previous week’s revised figure of 368,000. This was below the consensus estimate of 363,000. There was a decrease of 28,750 to 3,187,250 from last week’s 4-week moving average of 3,216,000.
On the earnings front, shares of General Motors Company (NYSE:GM) dropped 3.2%, following weak earnings which came in below the Street’s estimates for the reported quarter. The company profits declined owing to higher losses in Europe and low prices in North America. Shares of technology major Cisco Systems, Inc. (NASDAQ:CSCO) dropped 0.7% in spite of posting better-than-expected results for fiscal second quarter.
Energy stocks gained the most among the top ten S&P 500 industry groups. The Energy Select Sector SPDR (XLE) gained 0.9%. Stocks such as Hess Corp. (NYSE:HES), Marathon Oil Corporation (NYSE:MRO), Chevron Corporation (NYSE:CVX), Murphy Oil Corporation (NYSE:MUR) and Valero Energy Corporation (NYSE:VLO) gained 0.6%, 1.1%, 0.2%, 0.9% and 2.1%, respectively.
Utilities sector was the biggest loser among the S&P 500 groups. The Utilities SPDR (XLU) decreased 0.8%. Stocks such as Public Service Enterprise Group Inc. (NYSE:PEG), The Southern Company (NYSE:SO), American Electric Power Company, Inc. (NYSE:AEP), Exelon Corporation (NYSE:EXC) and Entergy Corporation (NYSE:ETR) lost 1.2%, 0.6%, 0.4%, 1.1% and 2.9%, respectively.