Stocks End Lower in Thin Trading, Led by Energy
Stocks ended lower in a thin, volatile session Tuesday, with the S&P and Nasdaq logging a fifth-consecutive decline as investors remained cautious over uncertainty in the euro zone and after a tepid GDP report.
The Dow Jones Industrial Average declined 53.59 points, or 0.46 percent, to close at 11,493.72, led by Alcoa and BofA .
The S&P 500 edged down 4.94 points, or 0.41 percent, to finish at 1,188.04. The Nasdaq slipped 1.86 points, or 0.07 percent, to end at 2,521.28.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, finished near 32.
Most S&P sectors finished lower, led by energy and utilities.
Stocks came off their worst levels earlier after the IMF unveiled a new six-month liquidity linein an effort to aid euro zone nations affected by the sovereign debt crisis.
“This was what I had expected and it is also my fear—you can’t solve a solvency problem with extra liquidity,” said Brian Battle, vice president of trading at Performance Trust Capital Partners. “It’s not a good signal that the Europeans will need the IMF and [eventually,] the U.S. will be called to help.”
Stocks plunged sharply in the previous session, as the lack of progress in dealing with heavy debt both in the U.S. and Europe further sapped investor confidence in equities.
Meanwhile, ratings agencies Moody’s and Standard & Poor’s said there were no immediate plans to downgrade the credit rating of the U.S. following the failure of a bi-partisan Congressional “super committee” to reach agreement on reducing the U.S. budget deficit.
But Fitch, the third leading ratings agency, which currently has the most positive rating of the three on U.S. debt, said it could cut the outlook on its "triple-A" rating, with a downgrade an outside possibility.
Minutes of the Fed's policy-setting meeting Nov. 1-2 showed that some policymakers were prepared to do more to support the U.S. economy, but decided to hold back amid an uncertain outlook.
In Europe, yields jumped dramaticallyin an auction of three-month and six-month Spanish treasury bills, with investors still nervous despite a victory of the center-right against socialists in elections last Sunday.
“From a technical perspective, it appears as if the downtrend in stocks that began in July of this year has resumed,” wrote Matthias Kuhlmey, managing director at HighTower Advisors. “Several market indexes are in the process of revisiting their early November levels, indicating that the price action experienced over the past three weeks was based on a ‘false’ breakout.”
Hewlett-Packard slumped after the tech giant reported that profit tumbled nearly 91 percent on weak computer sales. Meanwhile, analysts were mixed on the stock as RBC and Citigroup raised, while Susquehanna cut their price target on the company.
Campbell Soup fell after the canned soup maker posted higher-than-expected earnings and reaffirmed its forecast for the fiscal year.
Netflix dropped after the online movie streaming firm warned of a loss for 2012. Meanwhile, at least four brokerages cut their price targets on the firm.
U.S. regulators have informed Bank of America's board that the company could face public enforcement action if they are not satisfied with recent steps taken to strengthen the bank, the Wall Street Journal reported, citing people familiar with the situation.
Treasury prices recoveredafter the government auctioned $35 billion in 5-year notes at a high yield of 0.937 percent and bid-to-cover of 3.15.
The U.S. economy grew at a slightly slower pace than previously estimatedin the third quarter, as GDP grew at a 2.0 percent annual rate, according to the Commerce Department, down from the previously estimated 2.5 percent.
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On Tap This Week:
WEDNESDAY: Weekly mortgage applications, durable goods orders, personal income & outlays, jobless claims, consumer sentiment, oil inventories, 7-yr note auction, Super Cmte. must vote on detailed recommendations; Earnings from Deere
THURSDAY: Thanksgiving Day: All US markets closed
FRIDAY: Black Friday, NYSE early close, Fed balance sheet, money supply, USDA food prices outlook
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