After the European leaders urged Greece to adhere to new austerity measures in order to receive the next installment of its bailout package, debt woes returned to the forefront and US markets dropped a few points. Even though markets receded from t multi-year highs, benchmarks recouped most of their losses by the end of the day and settled marginally lower.
The Dow Jones Industrial Average (DJI) dropped 0.1% to finish the day at 12,845.13. The Standard & Poor 500 (S&P 500) edged down 0.04% and signed off yesterday’s trading session virtually unchanged at 1,344.33. The tech-laden Nasdaq Compoiste Index was down to 2,901.99, shedding a mere 0.1%. The fear-gauge CBOE Volatility Index (VIX) gained 3.9% to settle at 17.76. Consolidated volumes on the New York Stock Exchange, the American Stock Exchange and Nasdaq were 5.82 billion shares, significantly lower than last year’s daily average of 7.84 billion. On the NYSE, decliners outnumbered the advancers, with 57% stocks being on the losing side as against 40% gainers. The remaining 3% of the stocks were left unchanged.
The day lacked action on the home front. With no major economic data being released and with not many bellwether companies reporting results, domestic markets had to struggle for direction. Meanwhile, news from the other side of the Atlantic was far from favorable. European leaders, including the French and German leaders, urged Greece to accept new austerity measures if they expect to receive the next installment of the bailout package.
Meanwhile, a gathering of the three parties which are backing Prime Minister Lucas Papademos’ interim government, were postponed by a day. The delay, which reportedly occurred to allow the Greek leader more time to talk to representatives of the European Union, International Monetary Fund and the European Central Bank, was not well received. Greece needs to receive the $171 billion in order to avoid a debt default. German Chancellor Angela Merkel said: “I can’t quite understand why we need a few more days”. Greece needs to accept the measures and they need to decide and get the necessary done as soon as possible. During a joint briefing with French President Nicolas Sarkozy, Merkel commented: “Time is running out”. Sakozy too voiced his concerns and said: “An agreement has never been so close, neither for private nor public creditors…We have to conclude it”.
The markets failed to carry forward the momentum gained on Monday, and the financial and material sectors emerged as major laggards. The Financial SPDR Select Sector Fund (XLF) was down 0.5% and the Materials Select Sector SPDR (XLB) dropped 0.6%. Financial bellwethers American Express Company (NYSE:AXP), Citigroup, Inc. (NYSE:C), JP Morgan Chase & Co. (NYSE:JPM) and Wells Fargo & Company (NYSE:WFC) lost 0.8%, 0.7%, 0.4% and 1.4%, respectively. As for the material stocks, Alcoa Inc. (NYSE:AA), Nucor Corporation (NYSE:NUE), United States Steel (NYSE:X) and Arcelor Mittal (NYSE:MT) lost 0.2%, 0.6%, 1.2% and 1.4%, respectively.
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