Concerns that gridlock could
keep Greece from getting more bailout money spurred some relatively aggressive
selling that resulted in the stock market's worst session since December.
Ensuing losses also sent the stock market into the red for the week, snapping a
streak of five straight weekly gains.
News this morning that
eurozone officials are likely to suspend funds intended for Greece until the
country agrees to more austerity measures and the country signs them into law
aroused suspicions that the plan will face another prolonged debate in
parliament that will ultimately take the flagging country closer to default.
Headlines about a forthcoming
agreement helped lift the euro to a near two-month high against the greenback
yesterday, but it rolled over in response to today's story. By session's end it
was at $1.318 for a 0.7% loss.
The greenback's strength today
was augmented by an interest in safety, which also helped take Treasuries
higher. That took the yield on the benchmark 10-year Note back below 2.00% from
the 10-day high that it set in the prior session.
Perhaps of little surprise,
defensive-oriented stocks suffered the least today. For instance, the Utilities
sector shed only 0.1%, while the Consumer Staples sector settled with a loss of
just 0.2%. Health Care fell 0.3%.
Cyclically sensitive stocks
were hit hard. As a consequence, the Materials sector sank 1.8%. Its loss was
the worst of the 10 major sectors.
With market participants less
tolerant of risk the Volatility Index spiked to a three-week high of almost 22.
It eased back from there, but was still up more than 11% by the closing bell.
Selling also extended into the
commodity complex, resulting in a 1.1% loss for the CRB Index. Oil prices
tumbled 1.2% to $98.68 per barrel, while gold prices closed pit trade with a
0.9% loss at $1725 per ounce and silver settled with a 1.2% loss at $33.60 per
ounce.
Prior to Friday stocks didn't
move very dramatically. As such, the broad market finished with a fractional
loss on Monday. Trade on Tuesday, Wednesday, and Thursday finished with modest
gains after the broad market managed to overcome some modest morning selling
pressure. Those measured moves still put the S&P 500 at its best level in
seven months by Thursday.
Earnings this week were
generally upbeat, but the reports had little influence on overall trade.
Nonetheless, both Akamai Tech (AKAM 38.43, +0.37) and Visa (V 113.90, +1.48) impressed with their
latest quarterly report, but fellow tech play and Dow component Cisco (CSCO 19.90, -0.10) was clipped in the
session that immediately followed its upside earnings surprise. Fellow blue
chip Coca-Cola
(KO 67.94, -0.03) posted its own upside earnings surprise this week. Rival PepsiCo (PEP 63.95, -0.32) did the same. Dow
component Walt Disney (DIS 41.45, -0.08) also posted better-than-expected
earnings. Time Warner (TWX 37.52, -0.19) did, too, but complemented its upside
surprise with a dividend hike. BP Plc (BP 46.35, -0.42) also announced an
increase to its dividend.
Domestic data was light this
week. Friday featured a preliminary reading on consumer sentiment for February
from the University of Michigan. It made a surprise slip to 72.5 from 75.0 in
the prior month. The Treasury deficit for January made an unexpectedly steep
drop to $27.4 billion from the near $50 billion deficit posted in the prior
month, while the overall trade deficit grew by $1.7 billion to $48.8 billion in
December.
Earlier in the week data was
limited to news that the latest tally of initial weekly jobless claims totaled
358,000, which is less than the 370,000 initial claims that had been generally
expected among economists polled by Briefing.com. Consumer credit spiked during
December to $19.3 billion to more than double what had been widely expected.
Wholesale inventories showed a surprisingly sharp 1.0% increase during
December.
Fed Chairman Bernanke
testified to the Senate Budget Committee about the economy and its outlook in
the first half of the week, but becaue his comments did not deviate from those
delivered last week to the House Budget Committee market participants
considered it a non-event.
Market participants displayed
risk aversion in response to uncertainty surrounding Greece and its efforts to
secure another bailout. That brought about a concerted selling effort that
clipped most commodities and cut down the CRB Index for a 1.1% loss. For the
week, the CRB fell 0.7%.
Oil prices tumbled 1.2% to
$98.68 per barrel, but natural gas prices managed a flat finish at $2.48 per
MMBtu. Precious metals were clipped, such that gold prices closed pit trade
with a 0.9% loss at $1725 per ounce and silver settled with a 1.2% loss at
$33.60 per ounce.
Data from abroad was also in
the mix this week, but a focal point was European Central Bank (ECB) President
Draghi's decision to expand ECB collateral guidelines, effectively making
policy there more accommodative. The ECB did keep its target lending rate at
1.00%, though. As an aside, the Bank of England opted to leave its target rate
at 0.5%, but expanded its lending program by 50 billion to 225 billion pounds. DJ30
-89.23 NASDAQ -23.35 NQ100 -0.7% R2K -1.4% SP400 -1.1% SP500 -9.31 NASDAQ
Adv/Vol/Dec 654/1.77 bln/1880 NYSE Adv/Vol/Dec 742/750 mln/2300