(BAC) Stock Market News for September 20, 2011 – Market News

Pessimism and optimism over Greece’s debt woes guided the markets throughout Monday’s session, which finally saw benchmarks limiting their losses to inch down roughly by a percent. Initially, investors’ fears about Greece failing to prevent a debt default dragged the markets significantly lower. However, as hopes of a bailout fund overtook the negative sentiment, the benchmarks staged a comeback to cut down half of the day’s losses.

The Dow Jones Industrial Average (DJIA) declined by 108 points or 0.9% to settle at 11,401.01. The blue-chip index had plunged 250 points at the initial stage, spooked by Greek debt-default woes. The Standard & Poor 500 (S&P500) inched down a percent to finish the day at 1,204.09. The Nasdaq Composite Index also recouped its losses to finish 0.4% lower at 2,612.83. Though the benchmarks recouped half the day’s losses, this was not enough to prevent the markets from snapping their five-day winning streak. The fear-gauge CBOE Volatility Index (VIX) traded up 5% to settle at slightly lower than 32. On the New York Stock Exchange, Amex and Nasdaq, consolidated volumes were 7.11 billion shares, compared with the daily average of 7.9 billion. On the NYSE, for six stocks that settled in the red, only one stock managed to move up.

Incremental fears of Greece debt default dragged the benchmarks down initially, as growing pessimism about Greece running out of money dampened sentiment. Over the weekend, Euro leaders failed to provide any new measures to overcome lingering euro-zone debt-woes. Greek Prime Minister George Papandreou called off his scheduled trip to New York where he was to attend the United Nations General Assembly in order to deal with the crisis. Meanwhile, news of the euro-zone finance ministers’ decision to delay the next $11 billion tranche of aid to Greece until October weighed on investors.
While incremental fears about a possible Greek debt default returned to haunt the sentiments, a Wall Street Journal report mentioned that Greek Finance Minister Evangelos Venizelos has stated that the government was ready to cut down its spending in the 2012 budget and would shut several state-affiliated organizations. This statement from the finance ministers was ahead of his scheduled conference call with the European Union, European Central Bank and International Monetary Fund.

To quote the Greek finance minister Evangelos Venizelos, the two-and-half-hour conference call was “productive and substantive”. Officials from the Greece’ finance ministry said Greece and international money lenders were closing in on an agreement to provide the debt-stricken nation with the necessary funds. Greece is indeed in dire need of a bailout fund that would help save the nation from succumbing to debt default. Additionally, international money lenders urged Greece to focus on its austerity measures that would help limit is its debt burden.

This development brought some amount of optimism back into US markets and helped limit losses suffered by benchmarks. However, concerns were not totally washed out as investors remained skittish about Greece’s debt situation. Additionally, investors were wary of the outcome of the Federal Open Market Committee’s two-day meeting that is scheduled to start today. Investors await a decision on Federal Reserve policy on Wednesday and market watchers remain divided over their predictions of the outcome of this meeting. While some analysts believe that the Fed will be taking monetary steps to boost the economy, others opined that the Fed is preparing some new measures for the economy that is being termed as ‘Operation Twist’. However, reportedly even Fed officials are in disagreement over the next course of action.

Also on the domestic front, US President Barack Obama laid out a $3.6 trillion plan aimed at cutting the nation’s debt over the next decade. The White House said that the plan will likely be able to reduce debt by 2017. However, investors were unsure if the plan would actually pass through while Republicans criticized the plan and said they are viewing it as a political stunt.

Coming to sectoral stocks, banking shares once again took a heavy beating with bellwethers like Bank of America Corporation (NYSE:BAC), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM) and Citigroup, Inc. (NYSE:C) plunging 3.3%, 2.5%, 7.9%, 2.8% and 4.4%, respectively.

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