(BAC) Stock Market News for August 19, 2011 – Market News

On Thursday, fears that another recession was in the offing gripped investors in both the domestic and global markets. US markets were plagued by a multitude of concerns and benchmarks incurred heavy losses. To make matters even worse, economic data, which could have been the only saving grace, further dampened investor sentiment.

The Dow Jones Industrial Average (DJIA) eroded the small gains made on Wednesday, plunged down 3.7% to close at 10,990.58. Following the Dow’s fall, the tech laden Nasdaq and S&P 500 index also fell 5.2% and 4.5% to close at 2,380.43 and 1,140.65 respectively. Reacting to the market mayhem, the fear-gauge CBOE Volatility Index (VIX) shot up beyond 43. The Street had another busy day as consolidated volumes on the New York Stock Exchange, NYSE Amex and Nasdaq came in at 11.4 billion shares, the highest so far this week.

Coming to economic news, a report from the Labor Department said initial claims increased by more than the anticipated rate. The weekly jobless claims increased 9,000 to 408,000 for the week ending August 13. In a separate report, the National Association of Realtors said figures for existing home sales fell by 3.5% for the month of July against expectations of 2% rise. Lawrence Yun, NAR chief economist, said “Affordability conditions this year have been the most favorable on record dating back to 1970, but many buyers are being held back because banks are offering financing to only the most highly qualified borrowers, ignoring a large share of otherwise creditworthy buyers,” he said. “Those potential buyers represent the difference between an uneven recovery and a much more robust housing market that could stimulate additional economic activity and create jobs.” To make matters even worse, the Consumer Price Index rose 0.5% for the month. Economists had been expecting a growth of 0.2% for the month according to a survey conducted by Briefing.com.

A weak report from the Philadelphia Federal Reserve Bank fueled the recessionary fears in the market. A survey of U.S. Mid-Atlantic factory activity conducted by the Philly Fed saw a fall in the numbers of the regional manufacturing index. The figures came in at lowest point since two and a half years when the US was struck in recession. The index fell to minus 30.7 against economists’ expectations of a reading of 0.5 for the month of July.

In other news, another negative report from Morgan Stanley (NYSE:MS) dragged the indices even lower. The banking giant downgraded its global growth outlook for fiscal 2011 and 2012 to 3.9% and 3.8%, down previously from 4.2% and 4.5% respectively and said that both America and Europe are “dangerously close to recession.” A report in the Wall Street Journal said U.S. regulators are monitoring the financial condition of the European banks operating in the U.S in the wake of an economic crisis throughout the world.

Even before US markets opened, global markets had begun to feel the heat. All the major indices around the world saw heavy losses. Asian markets ended in the red with the Shanghai Composite Index, Hang Seng and Nikkei declining by 1.6%, 1.3% and 1.3% respectively. Japan said its exports were declining and Britain reported weaker than expected retail sales figures in July which confirms the threat of a possible slowdown in consumer activity in the economy. The FTSE in London, CAC in France and DAX in Germany all declined, by 4.9%, 5.3% and 6.5% to close in the red.

Coming to individual stocks, tech giant Hewlett-Packard (NYSE:HPQ) posted earnings results that marginally topped analysts’ expectations. However, the company lowered its outlook for the full year and said it is looking to spin off its PC business. The computer maker also said it will purchase Autonomy, a British software company for $10.2 billion. Retailer Sears Holdings (NASDAQ:SHLD) also reported its quarterly earnings results, registering a loss of $1.13 per share. Following this report, shares of the retailer fell more than 8%. Among banking stocks, JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C), The Bank of America (NYSE:BAC) and Wells Fargo & Co. (NYSE:WFC) lost 3.77%, 6.26%, 6.03% and 4.66% respectively.

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