(XLK) Stock Market News for December 22, 2011 – Market News

On Wednesday, markets recouped some of their initial losses during an afternoon rally and benchmarks finished almost mixed. Nonetheless, with concerns gaining an upper hand gains were not strong enough to return a broad cheer to the markets. To sum up, Oracle disappointed heavily with its quarter results, existing home sales data was gloomy, and long-term refinancing operation by the ECB left some apprehensions over the debt scenario.

The Dow Jones Industrial Average (DJIA) edged up by a mere 0.03% to close the day at 12,107.74. The Standard & Poor 500 (S&P 500) gained 0.2% to settle at 1,243.72. The tech-laden Nasdaq Composite Index inched down a percent and finished yesterday’s trading session at 2,577.97. The fear-gauge CBOE Volatility Index (VIX) slumped to its lowest point in many months, declining 7.7% to finish the day at 21.43. On the New York Stock Exchange (NYSE) total volume remained low at 3.58 billion shares. For every 60% of the stocks that advanced, 37% stocks declined. The remaining 3% of the stocks remained unchanged.

The tech sector was a heavy laggard and the Technology Select Sector SPDR (XLK) fund was down 1.6%. Disappointing quarter results by Oracle Corporation (NASDAQ:ORCL) dragged the broader index down, and Oracle itself suffered a slump of 11.7% in its share prices. Oracle’s adjusted second quarter earnings of 54 cents per share was below the Street’s expectations and the software major also reported a drop in both hardware and software sales. Oracle’s earnings miss was all the more in focus as it was the company’s first earnings miss in almost a decade.

The result weighed heavily on investors’ mind, and they grew wary of the general technology sphere and also the overall business and economic outlook. These concerns were well reflected through the dismal performances of the other tech bellwethers’ stocks. International Business Machines Corp. (NYSE:IBM), Dell Inc. (NASDAQ:DELL), Hewlett-Packard Company (NYSE:HPQ) and Cisco Systems, Inc. (NASDAQ:CSCO) dropped 3.1%, 3.0%, 1.8% and 2.6%, respectively.

On the economic front, home sales data from the National Association Realtors (NAR) acted as an overhang and its report on revised home sale counts of 2007 that elaborated that existing home sales to be 14.3% worse than previously reported came as a disappointment to investors. Total existing-home sales increased 4.0% to a seasonally adjusted annual rate of 4.42 million in November. Nonetheless, the sales number for the month of October was revised down to 4.25 million. The report also stated some historic revisions, which weighed down investor sentiment. According to the NAR: “The 2010 benchmark shows there were 4,190,000 existing-home sales last year, a 14.6 percent revision from the previously projected 4,908,000 sales. For the total period of 2007 through 2010, sales and inventory were downwardly revised by 14.3 percent. The revisions are expected to have a minor impact on future revisions to Gross Domestic Product”.

On the European front, the European Central Bank (ECB) provided three-year loans at an extremely low rate of 1% to 523 banks, and announced it was lending almost $640 billion to them. However, onlookers opined that the lending, which is one of the biggest amounts for a single operation, reflects the dismal state of the economy. Investors were apprehensive of the fact that with so many banks jumping in, the move reflects the ill health of all these banks. Concerns have also emerged about how effective such a move will be to deal with the debt crisis in the long term.

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