Stocks Fall Sharply Ahead of Close; Dell Rises
Stocks extended their losses in the final hour of trading Monday, led by banks and energy, as investors turned cautious amid signs of an economic slowdown.
The Dow Jones Industrial Average was down more than 40 points, led by JPMorgan and Bank of America, after tumbling almost 100 points on Friday to finish lower for the fifth-consecutive week following a disappointing government jobs report.
The S&P 500 and the tech-heavy Nasdaq declined. Some experts believe 1,227 is the next support level for the S&P. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell slightly to trade below 18.
Both the Dow and S&P are down almost 3 percent in June. And if stocks close lower again this week, it will be the longest losing-streak since 2002.
All 10 key S&P sectors slipped, led by energy and financials.
“There’s still a significant fallout from Friday’s lack of jobs creation, which has raised questions around government spending in jobs creation programs,” said Tim Speiss, Chairman of the Personal Wealth Advisors for EisnerAmper.
Speiss said markets will continue to trade sideways until September when he expects the economy to start seeing a turnaround.
However, some strategists at UBS believe that while equity markets are likely to remain volatile in the near-term, growth is expected to reaccelerate in the second half of this year, with the S&P finishing at 1,410.
"We continue to emphasize that while there are a lot of growth concerns in the U.S., corporates are still well valued," said Katie Klingensmith, economic and policy analyst, UBS Wealth Management Research. "We are overall positive on risk assets."
Goldman Sachs dissected the reason behind the sluggish growth in a new report, saying growth will probably rebound in the second half of the year as commodity prices drop back and any Japan-related disruptions unwind.
But the disappointing jobs report does not change the outlook for the economy and chances of a tighter policy in 2011 is "certainly possible" by year-end, said Philadelphia Fed President Charles Plosser, a well-known inflation hawk who has a vote on policy this year.
Bank stocks declined across the board, extending last week's decline, following chatter that Washington is thinking of increasing capital requirements.
Among individual names, Wells Fargo slipped after Rochdale downgraded the financial giant to "sell" from "neutral." This also comes after Moody's downgrade warning last week. The rating agency also cautioned Citigroup and Bank of America. (Read More: Bank Shares Take a Beating, and It May Not Be Over Yet)
Goldman Sachs could release documents to counter a Senate subcommittee report that said the bank misled clients about mortgage-linked securities, according to the Wall Street Journal. The banking giant faces probes by several government authorities into derivatives trades it executed in 2006 and 2007.
Meanwhile, Treasury Secretary Timothy Geithner urged top bankers to accept tough new financial regulations passed in response to the 2008 financial crisis, instead of pressuring Congress to weaken them.
Apple CEO Steve Jobs kicked off the firm's develeoper's conference to unveil the much-anticipated iCloud, a music-streaming service that the company hopes will power its next stage of growth and popularize Web-based consumer services. (Read: CNBC's live blog)
Meanwhile, Dell gained amid rumors that the tech giant could be getting ready to acquire networking solutions provider Brocade .
Also on the tech front, Sony fell after news of a cyber-attack on its European website, extending recent losses made in the wake of earlier hacking incidents that resulted in data breaches. In addition, Nintendo also said it suffered an attack on its network but that the hackers hadn't obtained customer data.
Airlines were under pressure after the International Air Transport Association estimated airlines will earn about $4 billion this year, down from $18 billion last year. Delta Airlines , AMR and United Continental fell more than 2 percent each.
Lowes declined after JPMorgan cut its rating on the home-improvement chain to "neutral" from "overweight."
Starbucks gained after BMO upgraded its rating on the coffee-house chain to "outperform" and boosted its price target on the stock to $45 from $40.
Oil prices slippedwith U.S. light, sweet crude slipped $1.21 to settle at $99.01 a barrel, while London Brent crude traded around $114.
Oil drillers were under pressure, led by Halliburton and Nabors , tumbling more than 4 percent each.
Gold gained to settle near $1,542an ounce, building on three consecutive weeks of gains and rising to its highest level since early May.
Southern Copper tumbled more than 8 percent after investors worried about mining policy decisions that could be taken by a leftist Ollanta Humala leading in the vote for president in Peru.
While there are no major economic data, Fed chairman Ben Bernanke is expected to address the International Monetary Conference in Atlanta, while Dallas Fed President Richard Fisher is scheduled to give an update on monetary policy and financial stability at 5:30 pm ET.
Meanwhile, the euro declined after Jean-Claude Juncker, chairman of the group of euro-zone finance ministers, said that the currency is overvalued relative to other major currencies.
In Europe, shares closed lower for a fourth-straight session after a new bailout package for Greece failed to calm worries over the euro zone debt situation. Meanwhile, Portugal elected a center-right government on Sunday. The incoming prime minister hopes markets will welcome the new government, saying it will bring stability.
Coming Up This Week:
MONDAY: Federal Reserve Chairman Bernanke speaks, Fed's Fisher speaks
TUESDAY: 3-year Treasury note auction, consumer credit; Fed's Dudley speaks, Fed's Lockhart speaks; Amazon shareholder meeting, Ford investor day.
WEDNESDAY: Weekly mortgage applications, McDonald's sales data, quarterly services survey, oil inventories, 10-year Treasury note auction, Fed's Beige Book; Fed's Hoenig speaks; Caterpillar shareholder meeting.
THURSDAY: Bank of England announcement, European Central Bank announcement; international trade, jobless claims, wholesale trade, 30-year Treasury bond auction, money supply; Lubrizol shareholders vote on Berkshire takeover; Fed's Plosser speaks, Fed's Yellen speaks; earnings from National Semiconductor.
FRIDAY: Import & export prices, Treasury budget; earnings from Lululemon Athletica.
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