Stock Market News for May 24, 2011 - Market News
24 Mayo 2011 - 4:07AM
Zacks
Global events weighed on investor sentiment to drag US indices
lower on Monday. While rising concerns about the euro-zone debt
situation significantly dampened benchmarks, disappointing
manufacturing data from China stepped in to further pressurize the
indices amidst the lack of any domestic data.
All of the 30 components that make up the Dow Jones Industrial
Average (DJIA), except one, were in the red and the index declined
1.1% to close at 12,381.26. Only McDonald's Corp. (NYSE:MCD) was
able to climb up among the 30 components in the Dow, moving up
0.2%. The Standard & Poor 500 (S&P 500) shed 1.2% to finish
the day at 1,317.37 and was also below its 50-day moving average
since April 19. The index was also at its lowest level since April
19th. The tech-laden Nasdaq Composite Index plunged 1.6% to
2,758.90. The fear-gauge CBOE Volatility Index (VIX) gained 2.6% to
settle at 17.88. On the New York Stock Exchange, Amex and Nasdaq,
consolidated volumes were at 6.44 billion shares compared with last
year's estimated daily average of 8.47 billion shares. On the NYSE,
for every four declining stocks, only one stock managed to edge
up.
The benchmarks were dragged lower as euro-zone debt worries gained
strength and it is feared that debt concerns might not be
restricted to Greece alone. Late on Friday, credit rating agency
Fitch had lowered its sovereign debt rating on Greece by three
notches to B+ from BB plus, citing the country’s inability to
resolve the crisis in its public finances. Earlier last week,
European Union officials had suggested there were chances of a
“soft restructuring” of Greek debt. With this latest development,
these fears have gained strength with Greece likely having to
restructure its debt and concerns over Spain and Italy adding to
euro-debt woes.
Fresh concerns were likely to arise about the country’s debt
situation after the completion of elections in the nation. Analysts
opined that after the possible defeat of the Socialists, the
Popular Party might focus even more on elevated debt levels than
what was expected earlier. As the elections conclude, the results
indicate voters are against additional austerity measures and the
Socialists have suffered a heavy defeat. Subsequently, as these
fears come true, this will automatically add to lingering euro-debt
worries and subsequently US markets are most likely to feel the
burden.
Italy, a country which had been relatively unaffected by euro-zone
debt concerns, has now joined the league of troubled economies to
fuel fears and add to the pressure on markets. Standard &
Poor’s Ratings Services downgraded its outlook for Italy’s A+
sovereign credit rating to ‘negative’ from ‘stable’ citing a
potential ‘political gridlock’. Gary Jenkins, head of fixed income
at Evolution Securities, commented: “Any concern that Italy’s large
debt burden is not on a downward trajectory would be of concern not
only for Italy, but for the euro area as a whole as in a worst-case
scenario Italy could probably be characterized as too big to bail”.
Meanwhile, Italian Treasury denied any political gridlock and said
it would “intensify” reforms. Led by Italian Prime Minister, Silvio
Berlusconi, the government is said to have been taking
revenue-raising measures and other steps to balance its budget by
2014.
Shifting the focus from Europe, the other global event that
dampened the mood of domestic investors was the sharp decline in
China’s manufacturing index. According to a survey conducted by
HSBC, the China Manufacturing Purchasing Managers' Index declined
to a 10-month low of 51.1 this month, compared with 51.8 in April.
US listed Chinese shares took a beating as the index tracking
U.S.-traded Chinese companies shed 2.2%. Among shares, China
Eastern Airlines Corp. Ltd. (NYSE:CEA), China Southern Airlines Co.
Ltd. (NYSE:ZNH), China Mobile Limited (NYSE:CHL), Guangshen Railway
Co. Ltd. (NYSE:GSH), Sinopec Shanghai Petrochemical Co. Ltd.
(NYSE:SHI), Yanzhou Coal Mining Co. Ltd. (NYSE:YZC) dipped 2.0%,
2.0%, 1.9%, 0.7%, 1.5% and 4.0%, respectively.
Crude oil prices declined once again as light, sweet crude futures
for June delivery dropped $2.40 to close at $97.77 per barrel on
the New York Mercantile Exchange. Among energy shares, Chevron
Corp. (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM),
ConocoPhillips (NYSE:COP), Marathon Oil Corporation (NYSE:MRO) and
Transocean Ltd. (NYSE:RIG) dropped 1.2%, 1.1%, 1.8%, 1.4% and 3.3%,
respectively.
CHINA EASTN-ADR (CEA): Free Stock Analysis Report
CHINA MOBLE-ADR (CHL): Free Stock Analysis Report
CONOCOPHILLIPS (COP): Free Stock Analysis Report
CHEVRON CORP (CVX): Free Stock Analysis Report
GUANGSHEN-ADR (GSH): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis Report
MARATHON OIL CP (MRO): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
SHANGHAI PETROC (SHI): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
YANZHOU COAL (YZC): Free Stock Analysis Report
CHINA SOUTH-ADR (ZNH): Free Stock Analysis Report
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