(XLF) Stock Market News for June 5, 2012 – Market News

A choppy session came to a halt yesterday with the Dow losing only a few points and the S&P 500 and Nasdaq just managing a finishing in the green. Concerns about Europe’s financial health as well as murky global economic conditions remained an overhang and the Dow had dropped by over 80 points at one point. However, a few media reports from Europe provided some respite to investors after the Dow suffered the year’s biggest drop last Friday.

The Dow Jones Industrial Average (DJI) declined 0.1% to close at 12,101.46. The Standard & Poor 500 (S&P 500) edged up 0.01% to end hardly changed at 1,278.18. The tech-laden Nasdaq Composite Index showed comparatively better strength as it gained 0.5% to finish yesterday’s trading session at 2,760.01. The fear-gauge CBOE Volatility Index (VIX) dropped 2.0% to settle at 26.12. It was somewhat a busy day on the Street as consolidated volumes on the New York Stock Exchange, the Nasdaq and the American Stock Exchange were roughly 7.15 billion shares, higher than the year-to-date daily average of 6.85 billion. Declining stocks on the NYSE edged past the advancers; as for 56% stocks that traded lower, 41% stocks moved up. The remaining 3% stocks were left unchanged.

During their last session of trading markets took a heavy battering with the Dow declining by nearly 275 points, its biggest single day drop since November last year. Moreover, the S&P 500 had suffered its largest percentage decline since November 9. European debt woes have been a constant bother for the markets for quite some time now amidst increasing concerns over global financial health. Meanwhile, dismal U.S. jobs data had further dampened sentiment, which eventually led to markets suffering heavy losses last Friday.

Coming to yesterday’s session, the Dow did start of at the lowest level since December and had also traded over 80 points for a while. As lingering worries over the financial situation remained a drag, U.S. economic data was once again provided nothing to cheer about. The U.S. Department of Commerce reported a downtrend in factory orders as it noted: “New orders for manufactured goods in April, down three of the last four months, decreased $2.9 billion or 0.6 percent to $466.0 billion”. On the contrary, consensus estimates were eyeing a 0.2% increase.

However, markets were spared another heavy battering as investors focused on various media reports, one of which also hinted at Germany easing its stance on various issues on which it had earlier adopted a tough stance. According to a report by The Wall Street Journal Germany was “willing to lift its objections to ideas such as common euro-zone bonds or mutual support for European banks if other European governments were to agree to transfer further powers to Europe”. The report also quoted a German official as saying: “The more that other member states get involved with this development and are prepared to give up sovereign rights to get European institutions more involved, the more we will be prepared to play an active role in developing things like a banking union”.

Germany doing away with its strict stance was perceived as a positive. However, these were media reports and another report in the New York Times mentioned that German officials mentioned they were “not talking about euro bonds”.

Moreover, Germany clarified that Spain’s decision to seek financial aid was “exclusively” the latter’s choice. However, it was also reported that Germany said that any assistance provided with euro zone funds will have to adhere to existing norms. These comments were made after a German magazine noted that German Finance Minister Wolfgang Schaeuble was pushing Spain to seek aid from the European Financial Stability Facility. The German spokesman also clarified: “If help is needed, everyone knows that Europe stands ready, that Europe shows solidarity and that Europe foresees ways of providing aid for it…But the decision on it lies, as soon as the figures are available, exclusively with the Spanish government”. Further, German Chancellor Angela Merkel’s was quoted as saying: “The world wants to know how we expect the political union to complement the currency union,” and, “We have to find an answer in the foreseeable future”.

Financials however failed to post gains yesterday and the Financial Select Sector SPDR (XLF) dropped almost 1.0%. Among these shares, Citigroup Inc. (NYSE:C), Bank of America Corp (NYSE:BAC), Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), U.S. Bancorp (NYSE:USB), JPMorgan Chase & Co. (NYSE:JPM) slumped 2.2%, 1.7%, 1.8%, 2.9%, 2.7% and 2.9%, respectively.

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

CITIGROUP INC (C): Free Stock Analysis Report

GOLDMAN SACHS (GS): Free Stock Analysis Report

JPMORGAN CHASE (JPM): Free Stock Analysis Report

MORGAN STANLEY (MS): Free Stock Analysis Report

US BANCORP (USB): Free Stock Analysis Report

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