(AXP) Stock Market News for August 11, 2011 – Market News

Indices were dealt yet another blow by a multitude of concerns as benchmarks incurred heavy losses on Wednesday. Worries about the debt crisis spreading to Italy and Spain bogged down investor sentiment with additional pressure coming from fears of France losing its AAA rating.

The Dow Jones Industrial Average (DJIA) had been feeling the heat very frequently off late and it posted its third fall of more than 500 points in five trading days. The Dow plunged 519 points or 4.6% to close at 10,719.94. The Standard & Poor 500 (S&P 500) slid 4.4% to settle at 1,120.76. The Nasdaq Composite Index lost 4.1% to finish the day at 2,381.05. The fear-gauge CBOE Volatility Index (VIX) shot up 23%. The Street had another busy day as consolidated volumes on the New York Stock Exchange, NYSE Amex and Nasdaq were 15.1 billion shares. Volumes were almost double that of the year’s estimated daily average of 7.8 billion. On the NYSE, for every eight stocks that declined, only three stocks managed to move up.

Just a day after the investors cheered the Dow’s 429-point jump, which also saw none of the 30 Dow components ending up in the red, bearish sentiment dragged all the Dow components down into the negative zone yesterday. Leading the declines were American Express Company (NYSE:AXP), Boeing Co. (NYSE:BA), Bank of America Corporation (NYSE:BAC), Walt Disney Co. (NYSE:DIS), General Electric Co. (NYSE:GE), 3M Co. (NYSE:MMM), Microsoft Corporation (NASDAQ:MSFT) and United Technologies Corp. (NYSE:UTX) and they plunged 7.2%, 7.3%, 10.9%, 9.1%, 5.5%, 5.4%, 5.4% and 5.8%, respectively.

The day’s losses were primarily attributable to concerns about Italy and Spain falling prey to the debt crisis. This fear dealt significant damage to the markets and after an index of European banks was heavily weighed down, financial stocks suffered heavy losses and the broader markets moved lower. Since late last year, the euro-zone debt crisis have been a serious issue for the markets and with countries like Ireland, Greece and Portugal facing the specter of the debt crisis, domestic markets had been severely punished on many occasions. The European Union had to step in each time to rescue those countries and it is uncertain as to what extent the EU can provide assistance if the fears of debt crisis spreading to Italy and Spain become true.

Additionally, rumors were doing the rounds that France may be next in line after the US to lose its AAA rating. This affected indices significantly and triggered a sell off with doubts arising about the strength of the French lenders, including the Societe Generale. However, after the second biggest bank in France, Societe Generale cleared the air about the speculation of France’s credit viability, benchmarks managed to stave off further losses.

Coming to economic news, a report from the Department of Commerce came in to show lesser than expected growth in wholesaler inventories. According to the report, Total inventories of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations but not for price changes, were $458.7 billion at the end of June, up 0.6 percent (+/-0.5%) from the revised May level and were up 15.8percent (+/-1.2%) from a year ago”. Economists had been expecting a growth of 0.9% and thus the economic surprise was a negative 33.33%.
With euro-zone debt woes gaining strength and rumors of France losing the AAA rating, bank shares were heavily weighed down. Among banking stocks, JPMorgan Chase & Co. (NYSE:JPM), Citigroup, Inc. (NYSE:C), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), Deutsche Bank AG (NYSE:DB) and Barclays PLC (NYSE:BCS) lost 5.6%, 10.5%, 10.1%, 9.7%, 11.6% and 11.3%, respectively.

AMER EXPRESS CO (AXP): Free Stock Analysis Report

BOEING CO (BA): Free Stock Analysis Report

BANK OF AMER CP (BAC): Free Stock Analysis Report

BARCLAY PLC-ADR (BCS): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

DEUTSCHE BK AG (DB): Free Stock Analysis Report

DISNEY WALT (DIS): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

MICROSOFT CORP (MSFT): Free Stock Analysis Report

UTD TECHS CORP (UTX): Free Stock Analysis Report

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