Stock Market Watch

Stocks Fall on Mixed Economic Data

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U.S. stocks sank lower Wednesday, as anxieties about the eurozone continued and a preliminary report showed that Chinese manufacturing has slowed sharply.
An lackluster report on the U.S. job market added to the gloomy mood on Wall Street.
Headlines from oversees are continuing to shock investors, even with some signs of strength within the U.S. economy.

The Dow Jones Industrial average lost 180 points, or 1.6%. The selling was broad, with all 30 components of the blue chip index losing ground. The S&P 500 fell 20 points, or 1.7%, and the Nasdaq dropped 47 points, or 1.9%.
Investors were unsettled by a disappointing auction of German bonds. The debt of Europe’s largest and most healthy economy is often considered the gold standard of eurozone sovereign debt, and yields have managed to hold near record lows. But the dismal auction results raise concerns.
Analysts state the poor German auction demonstrates that foreign investors are avoiding eurozone dominated bonds all together, and that there are growing signs that the problems from the peripheral bond markets are starting to affect the core of the eurozone.

The European Commission published a green paper on stability bonds Wednesday to help staunch those concerns, outlining proposals to fix the eurozone’s debt crisis. However, skepticism remains about how effective these plans will be.
Meanwhile, Chinese manufacturing activity fell to a 32-month low, heightening worries that the eurozone’s problems are spreading beyond Europe and augmenting fears about a global economic slowdown.
In the U.S., unemployment insurance claims rose higher during the latest week, while the savings rate rose, signifying that consumers may be clamping down on spending.
Stocks have taken a downward turn in recent sessions, as rising bond yields in Italy and Spain continue to rattle investor confidence.


Stocks ended in the red Tuesday amid concerns about U.S. economic growth, though losses moderated somewhat after the International Monetary Fund unveiled a beefed-up lending program to help otherwise healthy countries with short-term financing problems.

In world markets, European stocks closed sharply lower: Britain’s FTSE 100 (UKX) dropped 1.3%, the DAX (DAX) in Germany slid 1.4% and France’s CAC 40 (CAC40) lost 1.7%.
Asian markets ended in the red, after the report that showed Chinese manufacturing output fell to the lowest level since March 2009.
The Shanghai Composite (SHCOMP) ended the session 0.7% lower and the Hang Seng (HSI) in Hong Kong tumbled 2.1%. Japanese markets were closed Wednesday for holiday.

Regarding the U.S. economy, the government released several economic reports Wednesday including jobless claims, personal spending and income, and durable goods.
The number of people filing for initial unemployment benefits rose 2,000 in the latest week to 393,000. Analysts expected 391,000 jobless claims for the week ending November 19.
Personal income climbed 0.4% in October, while personal spending grew 0.1%. Analysts had expected both measures to rise 0.3%.
Meanwhile, orders of durable goods fell 0.7% in October — slightly less than the 0.9% drop economists had been expecting.

In corporate news, Bank of America (NYSE:BAC, Fortune 500) shares slid 4%, and briefly touched the lowest level since March 2009, after a report in The Wall Street Journal on Tuesday stated the bank was having difficulty meeting U.S. financial regulatory requirements.
Late Tuesday, the Federal Reserve also ordered the top 31 U.S. banks — with assets of $50 billion or more — to participate in stress tests that will simulate another financial crisis.
Tests will simulate a more severe global financial meltdown for six banks with the largest trading operations: Bank of America, Goldman Sachs (NYSE:GS, Fortune 500), Citigroup (NYSE:C, Fortune 500), JPMorgan Chase (NYSE:JPM, Fortune 500), Morgan Stanley (NYSE:MS, Fortune 500) and Wells Fargo (NYSE:WFC, Fortune 500).

Shares of many of those financial behemoths took a hit Wednesday: JPMorgan Chase, Citi and Morgan Stanley shares all dropped more than 2%.
Shares of Groupon (NASDAQ:GRPN) tumbled 14%, to $17.20 a share — well below its initial public offering price of $20. The Internet deal site’s stock has been battered this week — along with other newly public startups like LinkedIn — on renewed dot-com bubble concerns and concerns of overvaluation.
John Deere (NYSE:DE, Fortune 500) reported full-year earnings that hit a record $2.8 billion, and posted fourth-quarter net income that blew past expectations. Shares of the equipment maker climbed more than 3%, making it one of the strongest performers in the S&P 500.

The dollar gained against the euro, the British pound and the Japanese yen.
Oil for January delivery dropped $1.53 to $96.48 a barrel.
Gold futures for December delivery fell $13.20 to $1,689.20 an ounce.
For bonds, the price on the benchmark 10-year U.S. Treasury fell slightly lower, pushing the yield up to 1.95% from 1.94% late Tuesday.

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Post Written By: Meggan


Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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