Stocks end lower for fourth straight session
The Dow fell about 61 points, with a weak performance by banks and energy
Richard Drew / AP
By JeeYeon Park, CNBC.com
Stocks closed lower for the fourth-consecutive trading session Monday, led by weakness in banks and energy, as investors turned cautious over a slowdown in the recovery.
The Dow Jones Industrial Average fell 61.30 points, or 0.5 percent, to finish at 12,089.96, led by JPMorgan and Bank of America, after tumbling almost 100 points on Friday to finish lower for the fifth-consecutive week. If stocks finish lower again this week, it will be the longest losing-streak since 2002.
The S&P 500 slipped 13.99 points, or 1.08 percent, to end at 1,286.17, breaking through the 1,295 support level earlier in the session. Some experts believe 1,227 is the next support level for the S&P.
The tech-heavy Nasdaq declined 30.22 points, or 1.11 percent, to close at 2,702.56.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose to trade above 18.
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.
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.
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 3 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.
Packaging producer International Paper said it made an unsolicited bid to acquire smaller rival Temple-Inland for $30.60 per share, worth about $3.3 billion. Shares of Temple-Island skyrocketed more than 40 percent in extended-hours trading.
Oil prices slipped with 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.
Trading was on the lighter side with volume on the consolidated tape of the NYSE was 3.54 billion shares, while 957 million shares changed hands on the floor.
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.