(IMF) Stock Market News for October 31, 2011 – Market News

Markets chose to take a breather on Friday, closing on a flat note just a day after it posted a huge rally spurred on by the outcome of the European Council meeting. However, some of the encouragement ebbed after analysts questioned the effectiveness of the plan. Nonetheless, investors remained optimistic and the markets logged their fourth-straight week of gains and looked en route to posting the best monthly gains in decades.

In an uncharacteristic move, the Dow Jones Industrial Average (DJIA) gained only 22 points or 0.2% to settle at 12,231.11. It has almost become a norm for the blue-chip index to post double-digit swings and this small movement reflected the pause investors have opted to take. Only for the second time out of 69 sessions and since July 22 did the blue-chip index failed to post a three-digit movement. The Standard & Poor 500 (S&P 500) moved up 0.04% and finished the day at 1,285.08. However, the Nasdaq Composite Index took the opposite path, shedding 0.05% to finish the day at 2,737.15. The fear-gauge CBOE Volatility Index (VIX) continued its slump and dropped below 25 on Friday. On the New York Stock Exchange, NYSE Amex and Nasdaq, consolidated volumes were 7.71 billion shares, lower than the daily average of 8.03 billion shares. Decliners edged past the advancers on the NYSE by a ratio of 1,505 to 1,475.

Markets logged their fourth consecutive week of gains, with each benchmark posting gains of over 3.5%. For the week, the Dow, S&P 500 and Nasdaq were up 3.6%, 3.8% and 3.8%, respectively. The Dow registered its fifth weekly finish in the green and recorded its longest winning streak since January. The benchmarks also remained comfortably ahead in the year-to-date comparison and the Dow, S&P 500 and Nasdaq are up 5.6%, 2.2% and 3.2%, respectively.

As mentioned earlier, benchmarks are en route for their best monthly gains in decades. The Dow has gained 12% during October and the S&P 500 and Nasdaq are up 13% for the month. This momentum looks set to enable the Dow record the best monthly gains since January 1987 and the S&P 500 looks set for its biggest monthly gains since October 1974. The Nasdaq may post its best monthly gains since October 2002.

On Thursday, the benchmarks had surged by a minimum of 2.9% as investors drew impetus from the agreement on the European debt crisis that was concluded last Wednesday by European leaders, including the continent’s heads of state, the International Monetary Fund (IMF) and bankers during the European Council summit. European leaders were in agreement about the need to recapitalize European banks and Germany agreed to support the initiative to leverage the bailout fund. Yesterday, stocks also surged on news of European officials confirming the plan, by virtue of which, private investors will have to write-down half of their holdings of Greek debt. The emergency rescue fund will also be increased to roughly $1.4 trillion.

However, with certain analysts raising questions about the efficiency of the European plan, some of the optimism seems to have faded. Additionally, European leaders have not provided details on the plan, leaving the investors in the dark. While investors had also cashed in following reports of China stepping in to help make a progress to the European crisis, European leaders washed out hopes of an immediate deal with the Chinese.

Coming to sectoral stocks, financials did not enjoy a happy day as bellwethers including The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM) and UBS AG (NYSE:UBS) dropped 0.5%, 0.5%, 0.9% and 1.4%, respectively.

On the economic front, the Bureau of Economic Analysis reported an increase in personal income, personal disposable income and in personal consumption expenditures (PCE). While personal income increased $17.3 billion, or 0.1% and disposable personal income (DPI) increased $12.9 billion or 0.1% in September, PCE increased $68.7 billion, or 0.6%. However, the personal saving rate touched its lowest level since December 2007. Personal saving was $419.8 billion in September, down from $479.1 billion in August. Personal saving as a percentage of disposable personal income was 3.6% in September compared with 4.1% in August.

Separately, consumer sentiment in US was reported to have risen as the University of Michigan Consumer Sentiment Index moved up to 60.9, ahead of the estimates. However, consumer stocks were mostly in the red with J. C. Penney Company, Inc. (NYSE:JCP), Macy’s, Inc. (NYSE:M), Saks Incorporated (NYSE:SKS), Target Corp. (NYSE:TGT) and Wal-Mart Stores Inc. (NYSE:WMT) down 0.9%, 1.4%, 4.9%, 0.6% and 1.1%, respectively.

GOLDMAN SACHS (GS): Free Stock Analysis Report

PENNEY (JC) INC (JCP): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

SAKS INC (SKS): Free Stock Analysis Report

TARGET CORP (TGT): Free Stock Analysis Report

UBS AG (UBS): Free Stock Analysis Report

WAL-MART STORES (WMT): Free Stock Analysis Report

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