YAHOO [BRIEFING.COM]: Rekindled
concerns regarding sovereign debt drove the dollar to its best single-session
percentage gain since December, but moderate weakness mired the broader equity
market for the entire session.
Distress about the fiscal
health of the PIIGS contingent, which includes Portugal, Italy, Ireland,
Greece, and Spain, returned to the forefront with news that analysts at Fitch
trimmed Portugal's sovereign debt rating to AA- from AA. The announcement
dropped the euro to a 10-month low against the dollar, but bolstered the Dollar
Index, which closed trade with a near 1.4% gain at a new 10-month high.
The greenback's gain hampered
stocks for the entire session. Weakness was also widespread among stocks, such
that declining issues outnumbered advancers by more than 3-to-1 in the S&P
500.
Financials were the only major
sector to find any lasting support in the face of the broad-based slide, even
after Senator Dodd stated that President Obama would like to move quickly on a
financial reform bill and Kansas City Fed President Hoenig stated that it is
unlikely that banks have recognized all of their financial losses. Financials
finished with a 0.2% gain. No other major sector settled in positive territory.
There were a few individual
names that outperformed, though. Following better-than-expected earnings, both Darden
Restaurants (DRI 44.91, +1.00) and Lennar (LEN 17.69,
+0.63) hit a fresh 52-week, while Adobe (ADBE 36.51, +1.29)
logged its best single-session percentage advance in three months.
General Mills (GIS 72.18, -1.39) wasn't so fortunate.
The company beat the consensus earnings estimate and raised guidance for the
year, but its outlook was still shy of what Wall Street had forecast for fiscal
2010.
Meanwhile, ConocoPhillips
(COP 52.53, +0.02) had a choppy session despite its plans for higher
dividends and share repurchases and the intent to halve its equity ownership in
LUKOIL. Sharply lower oil prices bogged down most of the energy complex.
Oil prices fell as low as
$79.88 per barrel as a stronger dollar and a larger-than-expected 7.2 million
barrel build in weekly inventories conspired against the commodity. Contracts
for crude closed pit trade 1.6% lower at $80.61 per barrel.
Volatility spiked after the
Volatility Index had just set a 52-week low last week. The VIX surged 7.3% in
its sharpest hike since February this session.
Meanwhile, trading volume was
solid, but not very impressive as 1.0 billion shares exchanged hands on the
NYSE.
The dollar index's 1.3% gain
was the largest single session gain since December. This increase put pressure
on the market. Commodities, which are dollar denominated, were hit especially
hard this session. They declined 0.8%.
The decline in commodities was
led by a 2.1% decline in precious metals. Both gold and silver futures trended
lower throughout the session as the dollar persisted higher. April gold closed
down 1.4% at $1088.80 per ounce. May silver saw even steeper declines; it fell
2.3% to close at $16.64 per ounce.
Crude oil opened the pit trade
substantially lower. A greater-than-expected build in the inventory report this
morning sent the April crude oil contract to a session low at $79.88 per
barrel. However, it quickly rallied back to the $81 level and traded just above
the $80.50 level for the remainder of the session. April crude oil closed 1.6%
lower at $80.61 per barrel.
Natural gas was the strongest
energy commodity this session. It closed 0.7% lower at $4.10 per MMBtu.
Sugar futures continued their
recent volatile trade this session. The May contract closed 6.6% higher at
$0.177 per pound.
Treasuries failed to find
support. In turn, the benchmark 10-year Note dropped more than one full point.
That has lifted its yield to a one-month high near 3.85%. Pressure against
Treasuries intensified after results from a $42 billion auction of 5-year Notes
showed a yield of nearly 2.61%, a bid-to-cover ratio of 2.55, and an indirect
bid of 39.7%. The 5-year Note fell 25 ticks so that it now yields almost 2.60%.
Though it featured some
surprises, economic data proved inconsequential this session. New home sales
for February decreased 2.2% month-over-month to an annualized rate of 308,000
units, which was not only worse than expected, but also an all-time low.
Further, Inventories increased for the third consecutive month as builders
currently carry 9.2 months of supply, which is the highest level since May
2009.
Meanwhile, durable goods
orders for February climbed 0.5% and orders less transportation increased 0.9%.
The headline number was in stride with expectations, but the latter number was
actually stronger than expected.
Advancing Sector(s): Financials (+0.2%)
Declining Sector(s): Telecom (-1.1%), Consumer Staples
(-1.0%), Utilities (-1.0%), Consumer Staples (-1.0%), Health Care (-0.9%),
Energy (-0.7%), Tech (-0.6%), Industrials (-0.6%), Consumer Discretionary
(-0.5%) DJ30 -52.68 NASDAQ -16.48 NQ100 -0.6% R2K -1.0% SP400 -0.8% SP500 -6.45
NASDAQ Adv/Vol/Dec 796/2.31 bln/1875 NYSE Adv/Vol/Dec 1020/1.02 bln/2007