(XLF) Stock Market News for July 6, 2011 – Market News

After the indices posted their best weekly performance in two years, euro-zone debt fears gripped the markets yet again to dampen investor sentiment on Tuesday after Moody’s downgraded Portugal’s debt rating to “junk”. The benchmarks ended their five-day winning streak, beginning the month of July on a low note. Investors refrained from betting big ahead of a row of economic reports scheduled for release this week.

The Dow Jones Industrial Average (DJIA) shed 0.1% and finished the day at 12,569.87. The Standard & Poor 500 (S&P 500) closed down 0.1% at 1,337.88. However, news from Netflix, Inc. (NASDAQ:NFLX) boosted the tech-laden Nasdaq Composite Index by 0.4% and it settled at 2,825.77. On the New York Stock Exchange, trading volumes remained tight at 3.3 billion shares and the advance decline ratio was even. The fear-gauge CBOE Volatility Index (VIX) moved up to trade over 16.

The summer generally witnesses lower trading volumes. But, volumes remained particularly low on Tuesday as investors adopted a wait-and-watch attitude ahead of important economic reports that are scheduled for release this week. On Wednesday, the Institute for Supply Management will be reporting on activity outside the manufacturing sector, which will be followed by the initial claims report and data from Automatic Data Processing on Thursday. However, all eyes will be fixed on reports slated for Friday, as the government’s non-farm payrolls report for June will be released on that day.

Even before the Greece debt crisis could fade away, Portugal joined the league of European nations to dent the markets, right after they closed following the best weekly performance in two years. Moody’s Investors Service pushed Portugal’s rating down into the “junk” zone as it slashed the country’s debt credit rating by four levels or two notches. The ratings firm downgraded the nation’s rating from Baa1 to Baa2 andfeels Portugal needs a second bailout package to achieve its debt reduction goals.Moody’s stated in its report: “A further downgrade could be triggered by a significant slippage in the execution of the government’s fiscal consolidation program, a further downward revision of the country’s economic growth prospects or an increased risk that further support requires private sector participation”.

Meanwhile, The Wall Street Journal reported that the European banks are set to meet today to discuss the Greek debt situation. Private creditors are also expected to join the gathering as they might have to partially shoulder the responsibility of the rescue initiative.

On the domestic front, the Commerce Department reported a 0.8% rise in factory orders in May, better than the 0.9% decline in April. However, this could hardly help the markets negate the worrying factors as the jump came in lower than the economists’ expectation of a 1% increase. New orders increased 0.2% excluding transportation.

Netflix announced it was expanding its internet streaming services to 43 countries, later this year, throughout Latin America and the Caribbean. The company’s shares jumped 8.1% and boosted the Nasdaq. Other tech gainers included Amazon.com Inc. (NASDAQ:AMZN), Google Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), International Business Machines Corp. (NYSE:IBM) and EMC Corporation (NYSE:EMC) and they were up 1.8%, 2.2%, 1.8%, 1.2% and 0.2%, respectively. However key stocks like Hewlett-Packard Company (NYSE:HPQ), Cisco Systems, Inc. (NASDAQ:CSCO) and Intel Corporation (NASDAQ:INTC) shed 1.6%, 0.8% and 0.4%, respectively.

The financial sector was among the losers and the Financial Select Sector SPDR (XLF) fund moved down 0.9%. Losers in the sector included Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Citigroup, Inc. (NYSE:C), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS) and Wells Fargo & Company (NYSE:WFC) and they dropped 0.8%, 1.3%, 0.7%, 1.6%, 2.6% and 0.9%, respectively.

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