(CAT) Stock Market News for August 8, 2011 – Market News

The Dow Jones Industrial Average see-sawed between positive and negative territory, while the markets finished mixed on Friday amid global economic concerns. Encouraging economic reports helped the markets prevent another heavy slide on the closing day of the week, but they were not strong enough to wash out the huge losses suffered through the week as the benchmarks ended their worst week in almost two years.

The Dow closed with modest gains at 11,444.61, up 0.5%. The Standard & Poor 500 (S&P 500) declined marginally, by 0.06% to settle at 1,199.38. The tech-laden Nasdaq Composite Index shed 0.9% and closed the day at 2,532.41. In what was the worst week for markets in more than two years, the Dow, S&P 500 and the Nasdaq plunged 5.8%, 7.2% and 8.1%, respectively. The fear-gauge CBOE Volatility Index (VIX) moved up 1.1% to settle at 32. The index had soared to its highest level since May 2010 when it touched 39.25 during the day, but finally eased out. However, the fear-gauge is still above the technical level of 30, which is considered to reflect a high degree of fear in the market. It was also one of the busiest days in over a year as consolidated volumes of 15.9 billion shares were twice as much as the average volume on the New York Stock Exchange, Amex and Nasdaq. On the NYSE, for three stocks that declined, only one managed to climb up.

The Dow kept moving to and fro between positive and negative territory. After the initial jump, the blue-chip plunged more than 400 points, and was 243 points lower before the afternoon.  The index then gained around 400 points in under an hour and was up 135 points.This wild run continued through the day, finally coming to a halt after the index added an additional 61 points to its kitty. Investors were happy to learn that the mood in the Dow was dominated by the advancers as 20 of the 30 Dow components managed to settle in the green. Leading the gains were Caterpillar Inc. (NYSE:CAT), Johnson & Johnson (NYSE:JNJ), Kraft Foods Inc. (NYSE:KFT), The Coca-Cola Company (NYSE:KO), Procter & Gamble Co. (NYSE:PG), Wal-Mart Stores Inc. (NYSE:WMT), Exxon Mobil Corporation (NYSE:XOM), and they were up 1.6%, 1.4%, 3.2%, 1.4%, 1.7%, 1.5% and 1.3%, respectively.

If the markets had become excessively worried about economic growth, it was partially due to the string of economic reports that failed to show any sign of recovery. Housing and labor reports in particular, had dampened the mood on several occasions in the past. Interestingly, as the markets grappled with the fear of sliding back into another recession, it was the jobs market report that eased the pressure somewhat.

The government’s non-farm payroll data provided the necessary impetus as it came in better than expected. The Department of Labor reported an addition of 117,000 jobs to nonfarm payroll employment in July. It was better than the expected figure of an additional 85,000 jobs. The healthcare, retail trade, manufacturing and mining sectors registered significant job gains. The unemployment rate remained virtually unchanged at 9.1%. The U.S. Bureau of Labor Statistics also reported: “The number of persons unemployed for less than 5 weeks declined by 387,000 in July, mostly offsetting an increase in the prior month”.

However, concerns about the domestic and the global economic scenario kept investors on the edge. Sentiments were also bogged down by fears of the possibility of Standard & Poor downgrading the US credit rating after the closing bell. If the rating agency opts to downgrade, it might act as a severe blow to the US stock markets, and possibly even to global markets. A downgrade by Standard & Poor will take away the nation’s cherished AAA rating for the first time since 1917.

Concerns also seeped in from the European front as the markets looked to European officials for a direction. After Ireland, Greek and Portugal, fears of economic crisis has likely spread to Italy and Spain. The focus was on how European leaders will manage the crisis. By noon, sources revealed that the European Central Bank will be buying Italian and Spanish bonds, depending on how the Italian Prime Minister Silvio Berlusconi manages to execute reforms.

CATERPILLAR INC (CAT): Free Stock Analysis Report

JOHNSON & JOHNS (JNJ): Free Stock Analysis Report

KRAFT FOODS INC (KFT): Free Stock Analysis Report

COCA COLA CO (KO): Free Stock Analysis Report

PROCTER & GAMBL (PG): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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