(BAC) Stock Market News for October 4, 2011 – Market News

Fears arising from the Greek debt crisis pushed the benchmarks lower and the S&P 500 logged its lowest closing level since September 2010.October began on a despondent note, as Greece’s acknowledgement of possibly not meeting its target of deficit reduction for this year dominated investor sentiment, overshadowing a strong US manufacturing report.

The Dow Jones Industrial Average (DJIA) declined 2.4% to settle at 10,655.30. The Standard & Poor 500 (S&P 500) closed at its lowest level since September 8, 2010, losing 2.9% to finish at 1,099.23. The Nasdaq Composite Index was down to 2,335.83, plunging 3.3%. The fear-gauge CBOE Volatility Index (VIX) soared almost 6% to trade over 45. A busy day for the Street saw consolidated volumes soaring to roughly 10.9 billion shares on the New York Stock Exchange, Amex and Nasdaq, substantively higher from the year’s current daily average of 7.98 billion. On the NYSE, for every one stock that moved up, a total of 10 stocks declined.

Euro-zone debt worries once again crippled the markets as Greece’s parliament admitted the nation would not meet its 2011 target for deficit reduction, even after adopting austerity measures. According to a 2012 draft budget approved by Greece’s cabinet over the weekend, the predicted deficit of gross domestic product for 2011is 8.5%, considerably higher than the desired 7.6%.

Meanwhile, the nation agreed to implement new austerity measures amounting to $8.8 billion. The European Union, European Central Bank and the International Monetary Fund, popularly termed as ‘Troika”, are present in Athens, scrutinizing Greece’s financial ability. Earlier in September, the troika had postponed its trip to Athens till October. Now, if the Troika delays the bailout fund, Greece might find itself in a serious cash crunch and may be unable to pay its debt.

Last week, when euro-zone members voted to expand the powers of the European Financial Stability Facility (EFSF) it was believe that a resolution to European debt problems was imminent. The Bundestag, or the lower house in the German legislature, had voted to nearly double Germany’s guarantees to the European Financial Stability Facility to €211 billion, or $373 billion. Also last week, on Wednesday, Finland’s parliament had approved the proposal, reducing some of the uncertainty over the debt crisis issue which has been dogging financial markets since late July. But developments have taken a negative turn over the weekend and news of Greece likely missing its debt-reduction target has dampened sentiment all over again.

European concerns have been weighing on banking stocks and it was no different yesterday. Bellwethers like, Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), UBS AG (NYSE:UBS) and Citigroup, Inc. (NYSE:C) slumped 9.6%, 4.9%, 4.7%, 7.7%, 7.6% and 9.8%, respectively.

Concerns from the European continent were strong enough to wash out optimism arising from a strong US manufacturing activity report. According to the report from the Institute for Supply Management: “”The PMI registered 51.6 percent, an increase of 1 percentage point from August, indicating expansion in the manufacturing sector for the 26th consecutive month, at a slightly higher rate. The Production Index registered 51.2 percent, indicating a return to growth after contracting in August for the first time since May of 2009”. The consensus expectation for the index was a reading of 50.4.

Separately, the U.S. Census Bureau of the Department of Commerce reported: “Construction spending during August 2011 was estimated at a seasonally adjusted annual rate of $799.1 billion, 1.4 percent (±2.1%)* above the revised July estimate of $788.3 billion. The August figure is 0.9 percent (±1.9%)* above the August 2010 estimate of $791.7 billion”.

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