(XLE) Stock Market News for March 21, 2012 – Market News

Concerns about softening economic growth in China weighed on US investors and subsequently markets ended their winning streak.  China also upped its oil prices and comments from a BHP Billiton executive about flattening demand for iron ore from China affected the energy and industrial sectors.

The Dow Jones Industrial Average (DJI) lost 0.5% to settle at 13,170.19. The Standard & Poor 500 (S&P 500) declined 0.3% to finish yesterday’s trading session at 1,405.52. The tech-laden Nasdaq Composite Index edged down 0.1% to close slightly lower at 3,074.15. The fear-gauge CBOE Volatility Index (VIX) gained 3.6% to touch 15.58. Consolidated volumes on the New York Stock Exchange, the Nasdaq and Amex were roughly 6.2 billion shares, lower than this year’s daily average of 6.9 billion shares. For more than two stocks that advanced on the NYSE, only one stock could manage to trade higher.

The benchmarks have only recently recorded multi-year highs. The S&P 500 was the latest achiever, reaching its best closing levels since May 2008 on Monday. Moreover, the S&P 500’s closing level of 1,405.52 on Monday was also its new 52-week high. However, the S&P 500 ultimately snapped its three-day winning streak. Among the 10 industry groups of the S&P 500, the energy and industrial sectors suffered the worst declines.

As for the energy sector, the Energy SPDR Select Sector Fund (XLE) was down 1.5% and stocks including Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM), ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO) and Valero Energy Corporation (NYSE:VLO) dropped 1.5%, 0.5%, 0.6%, 1.9% and 1.8%, respectively. Separately, industrials also received a battering and the Industrial SPDR Select Sector Fund (XLI) was down 1.2%. Industrial stocks including Honeywell International Inc. (NYSE:HON), E.I. du Pont de Nemours (NYSE:DD), Dow Chemical (NYSE:DOW) and 3M Company (NYSE:MMM) were down 1.6%, 1.0%, 0.4% and 0.4%, respectively.

The downfall of the energy and industrial sectors was due to developments in China. For the second time in just over five weeks, China raised its fuel prices. Meanwhile, Saudi Arabia’s promise of fulfilling any shortage in global supply of fuel dragged crude prices lower in New York. Coming back to China, an executive from BHP Billiton Limited (NYSE:BHP) said the demand for iron-ore from China is seeing a “flattening” trend. This sparked off widespread concerns about softening economic growth in the world’s second largest economy. China is also the world’s largest metals consumer. Thus, a comment of this nature was sure to impact the energy, commodities or industrials, and was eventually a big drag on the broader markets.

On the domestic front, the Commerce Department reported that housing starts dropped 1.1% to a seasonally adjusted annual rate of 698,000 in February. Building permits jumped 5.1% to 717,000 in February, thus recording the highest level since mid October 2008. This set of data follows Monday’s report according to which the National Association of Home Builders/ /Wells Fargo Housing Market index of homebuilder sentiment remained flat in March at 28. The index had moved up during the last five months and is currently at its highest level since June 2007. Barry Rutenberg, chairman of the NAHB, had commented: “While builders are still very cautious at this time, there is a sense that many local housing markets have started to move in the right direction and that prospects for future sales are improving”.

BHP BILLITN LTD (BHP): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

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

HONEYWELL INTL (HON): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

VALERO ENERGY (VLO): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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