Stocks Finish Lower for Second Consecutive Day
The U.S. equity market finished lower for the second consecutive day. All three major indexes ended the day in red, following concerns over a monetary policy tightening by China to slowdown its economy to curb inflation. Earlier today, China reported that its fourth-quarter GDP grew more than forecast, raising concerns that the world’s fastest growing major economy will further tighten its monetary policy to fight inflation. China has already taken steps to curb inflation; however, its economy has continued to grow at a brisk pace as indicated by the fourth-quarter GDP numbers.
China’s tightening concerns overshadowed some positive economic news in the U.S. Earlier today; the Labor Department reported that the initial jobless claims for the week ended January 15 fell more than forecast, indicating a recovery in the labor market. Also, a report from the National Association of Realtors showed that sales of U.S. existing homes rose in the month of December.
Despite the positive news on the economic front stocks were lower throughout the day, with the Dow Jones finishing 0.02% lower at 11,822.80, the S&P 500 finishing 0.13% lower at 1,280.26, and the Nasdaq finishing 0.77% lower at 2,704.29.
Basic Materials stocks were the worst performers in the S&P 500 today, finishing 1.69% lower, followed by Technology stocks, which finished 1.01% lower. Energy stocks fell 0.81%. Utilities were the best performers on a day of decline in the broad market, finishing 0.08% higher.
Among the major gainers and losers in today’s trading were F5 Networks Inc. (NASDAQ: FFIV), which finished the day 21.35% lower at $109.15, American International Group Inc. (NYSE: AIG), which finished the day 15.37% lower at $43.18, Dillard’s Inc. (NYSE: DDS), which finished the day 11.77% higher at $41.96, Morgan Stanley (NYSE: MS), which finished the day 4.58% higher at $29.02, Johnson Controls Inc. (NYSE: JCI), which finished the day 3.31% lower at $38.80, and eBay Inc. (NASDAQ: EBAY), which finished the day 5.76% higher at $30.78.
In the commodities market, crude oil fell on concerns over a rate hike in China. Crude oil for delivery in February dropped 2.9% to $88.22 a barrel on the New York Mercantile Exchange. Brent crude for delivery in March, meanwhile, fell 2.2% to $95.96 a barrel on the ICE Futures Europe exchange in London. China is one of the biggest energy consumers. A tighter monetary policy would slowdown the Chinese economy, which would lower demand for energy from the world’s second largest economy.
