(AA) Stock Market News for October 26, 2011 – Market News

The benchmarks’ three-day rally hit a roadblock as the lack of conviction among investors about European leaders finding a solution to the region’s debt crisis on Wednesday’s summit and disappointing domestic corporate earnings weighed down the markets.

Markets reversed their winning streak and posted heavy losses with the Dow Jones Industrial Average (DJIA) plummeting 205 points or 1.7% to settle at 11,708.44. The Standard & Poor 500 (S&P 500) declined 2.0% to finish at 1,229.23. The tech-laden Nasdaq Composite Index plunged 2.3% and closed at 2,638.42. Just a day after the fear-gauge CBOE Volatility Index (VIX) dropped below the key-level of 30, incremental anxiety among investors once again took it 10% higher to trade over 32. However, on a day of sharp declines, the markets continued the trend of low volumes as on the New York Stock Exchange, NYSE Amex and Nasdaq, consolidated volumes were only 7.78 billion shares, lower than the daily average of 8.01 billion. On the NYSE decliners outnumbered upward moving stocks by a ratio of 2,491 to 520.

While the Dow suffered the heavy declines, only two stocks, namely Cisco Systems, Inc. (NASDAQ:CSCO) and Intel Corporation (NASDAQ:INTC), were the gainers among its 30 components, and they were up 0.5% and 0.2%, respectively.  Leading the declines were Alcoa, Inc. (NYSE:AA), Bank of America Corporation (NYSE:BAC), EI DuPont de Nemours & Co. (NYSE:DD), Hewlett-Packard Company (NYSE:HPQ) and JPMorgan Chase & Co. (NYSE:JPM) and they declined 4.2%, 3.9%, 2.5%, 3.7% and 3.1%, respectively. However, the biggest loser in the blue-chip index was 3M Co. (NYSE:MMM) and it plunged 6.3%, weighed down by disappointing third quarter results.

Also on the earning front, MF Global Holdings Ltd.’s (NYSE:MF) quarter results revealed an unexpected loss, dragging the stock down 47.6% to a last trading price of 1.86 per share. Cummins Inc.’s (NYSE:CMI) third quarter results came in above expectations, but lowering its full-year revenue estimate led to a 5.1% fall in the stock. Texas Instruments Inc. (NYSE:TXN) and United Parcel Service, Inc. (NYSE:UPS) reported better-than-expected results, but their shares dropped 2.3% and 2.1%, respectively. Texas Instruments had to pay the price of acknowledging that economic uncertainty would hurt its current quarter. BP plc (NYSE:BP) reported a drop in profits, but results exceeded expectations and helped the stock surge 4.0%. Xerox Corp. (NYSE:XRX) managed gains of 0.3% after it posted better-than-expected profit and revenues.

Markets’ sentiment had been trending up over the past couple of trading days over the expectations of the European leaders meeting in a summit to fix the European debt crisis. However, yesterday the optimism was eroded as reports of the cancellation of a meeting ahead of the Wednesday’s summit spooked investors. Nonetheless, the scheduled meeting on Wednesday is still on track, and European leaders will likely make progress on the region’s debt situation.

On the economic front, The Conference Board reported a decline in the Consumer Confidence Index in October, reversing September’s upward movement. The index dropped to 39.8 from 46.4 in September and is also significantly lower than consensus expectations of 46.5. The Present Situation Index declined to 26.3 from 33.3, and The Expectations Index was down to 48.7 from 55.1 last month. Lynn Franco, Director of The Conference Board Consumer Research Center, stated in the report: “Consumer confidence is now back to levels last seen during the 2008-2009 recession. Consumer expectations, which had improved in September, gave back all of the gain and then some, as concerns about business conditions, the labor market and income prospects increased. Consumers’ assessment of present-day conditions did not fare any better. The Present Situation Index posted its sixth consecutive monthly decline, as pessimism about the current economic environment continues to grow”. However, in a separate report, the S&P/Case-Shiller Home Price Index reported a 3.8% decline year on year in August.

Coming back to earnings news, tech-bellwether Amazon.com Inc. (NASDAQ:AMZN) reported a heavy slump of 73% in its net profit after the closing bell and also missed both bottom and top-line expectations. The company reported earnings per share of $0.14, sharply lower than expectations of earnings of $0.24 per share. Revenues were up 44% year on year, but fell short of expectations.

ALCOA INC (AA): Free Stock Analysis Report

AMAZON.COM INC (AMZN): Free Stock Analysis Report

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

BP PLC (BP): Free Stock Analysis Report

CUMMINS INC (CMI): Free Stock Analysis Report

CISCO SYSTEMS (CSCO): Free Stock Analysis Report

DU PONT (EI) DE (DD): Free Stock Analysis Report

HEWLETT PACKARD (HPQ): Free Stock Analysis Report

INTEL CORP (INTC): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MF GLOBAL HLDGS (MF): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

TEXAS INSTRS (TXN): Free Stock Analysis Report

UTD PARCEL SRVC (UPS): Free Stock Analysis Report

XEROX CORP (XRX): Free Stock Analysis Report

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