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Stocks Close Mostly Lower But Off Worst Levels - U.S. Commentary

3/28/2012 4:39 PM ET

Stocks moved mostly lower over the course of the trading day on Wednesday, extending the downward move seen going into the close of the previous session. Disappointing U.S. economic data contributed to the continued weakness in the markets.

The major averages ended the session well off their worst levels of the day but still closed in the red. The Dow fell 71.52 points or 0.5 percent to 13,126.21, the Nasdaq dropped 15.39 points or 0.5 percent to 3,104.96 and the S&P 500 slid 6.98 points or 0.5 percent to 1,405.54.

The weakness that emerged on Wall Street was partly due to the release of a report from the Commerce Department showing that U.S. durable goods orders rose by less than economists had anticipated in the month of February.

The report showed that durable goods orders rose by 2.2 percent in February following a revised 3.6 percent decrease in January, while economists had expected orders to increase by about 2.9 percent.

Peter Boockvar, managing director at Miller Tabak, said, "After the distorted level of orders in late '11 and January '12 due to the expiration of the 100% depreciation tax credit (going to 50% in '12), February orders were just ok and didn't see the snapback hoped for after the drop in January."

"While there is a lot of optimism about the U.S. economy, GDP growth is still only going to be around 2% in Q1 and the economies in Europe and Asia are slowing," he added.

Profit taking also contributed to the pullback by stocks, with some traders cashing in on the strong upward move seen over the past several months.

A number of analysts have called for a correction by the markets, but traders have thus far seemed wary of missing out on any further upside.

Among individual stocks, shares of Christopher & Banks (CBK) fell by 15.7 percent after the women's apparel retailer reported a net loss of $0.89 per share for the nine weeks ended January 28th, 2012. The fourth quarter was cut short as the company shifted its reporting calendar.

Jos. A. Bank (JOSB) also closed lower after the men's apparel and accessories retailer reported fourth quarter earnings growth but said the first quarter is off to a slow start.

Meanwhile, shares of Amylin Pharmaceuticals (AMLN) jumped by 54.5 percent after Bloomberg reported that the biopharmaceutical company rejected a $3.5 billion unsolicited takeover bid from Bristol-Myers Squibb (BMY) earlier this year.

Sector News

A drop by commodities prices contributed to the weakness on Wall Street, with resource stocks helping to lead the way lower.

Within the sector, gold stocks saw substantial weakness on the day, dragging the NYSE Arca Gold Bugs Index down by 1.8 percent. The losses by gold stocks came as the price of the precious metal tumbled by $27 an ounce.

Healthcare provider stocks also came under significant selling pressures, resulting in a 2.2 percent loss by the Morgan Stanley Healthcare Provider Index. Sunrise Senior Living (SRZ) turned in one of the sector's worst performances, tumbling by 10.6 percent.

Railroad, chemical, and semiconductor stocks also posted steep losses, while strength among banking and airline stocks helped to limit the downside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index fell by 0.7 percent and 0.8 percent, respectively, while China's Shanghai Composite Index tumbled by 2.7 percent.

The major European markets also showed notable moves to the downside on the day. While the U.K.'s FTSE 100 Index dropped by 1 percent, the French CAC 40 Index and the German DAX Index both ended the day down by 1.1 percent.

In the bond market, treasuries saw considerable volatility but eventually ended the session nearly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, closed up by less than a basis point at 2.196 percent.

Looking Ahead

Economic data is likely to attract some attention on Thursday, with the Labor Department due to release its weekly jobless claims report. The Commerce Department is also scheduled to release its final report on fourth quarter GDP.

Trading could also be impacted by reaction to earnings news from consumer electronics retailer Best Buy (BBY), which is scheduled to release its fourth quarter results before the start of trading on Thursday.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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