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US stocks end week in the red

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Capital Market
Last Updated : Jun 17 2013 | 11:00 AM IST

US stocks ended with moderate losses for the week that ended on 14 June 2013. Indices lost between 1% to 1.3% for the week. Most of the weekly losses were incurred on the last trading day of the week, ie on Friday, 14 June 2013. Economic data was heavy on Friday and traders looked forward to cues from there for directing market momentum.

For the week, the Dow ended lower by 177.94 points (1.2%) at 15,070.18. Nasdaq ended lower by 45.66 points (1.3%) at 3,423.56. S&P 500 ended lower by 16.65 points (1%) at 1,626.73.

On Monday, the major averages were largely unchanged. Before the open, Standard & Poor's raised its US outlook to Stable from Negative. The change contributed to a strong start, but buying interest tapered off shortly thereafter. Apple swung from seeing a solid intraday gain to ending with a loss after unveiling a new mobile operating system and announcing the launch of a radio service at its Worldwide Developers Conference.

On Tuesday, the S&P 500 settled lower by 1.0% as all ten sectors ended in the red. Stocks began the day sharply lower as overseas concerns contributed to a rise in global interest rates, which, in turn, fueled the selling of equities. The Bank of Japan's decision to maintain its policy stance underwhelmed investors who expected the central bank to address recent bond market volatility. However, the lack of relevant commentary caused investors to sell bonds and equities in favor of the yen.

Equities began Wednesday's session on their highs, but the major averages were unable to hold their flat lines past the opening. The S&P 500 spent the entire day in a steady decline as minor bounces were met with aggressive selling. In addition, early weakness coincided with a decline in dollar/yen, as the pair dropped to 95.25, before recovering a portion of its losses. Cooper Tire jumped 41.1% after the tire maker agreed to be acquired by Apollo Tyres for $35 per share. The purchase price represents a 42.5% premium.

On Thursday, the S&P 500 settled higher by 1.5%. Homebuilders displayed broad strength.

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US stocks fell on Friday, 14 June 2013 chalking up a third weekly loss in four, with investors on guard ahead of next week's monetary-policy decision by the Federal Open Market Committee. A day after Wall Street rallied on thinking the Federal Reserve would continue record-low interest rates, investors took a cautious stance on the final session of a losing week.

The FOMC holds a two-day policy gathering next week, with Fed Chairman Ben Bernanke due to hold a news conference Wednesday, after the FOMC decision. Wall Street is tracking economic reports for clues as to whether the economy is strong enough to withstand the much-talked of tapering of Fed stimulus, specifically its $85 billion in monthly bond purchases.

After climbing 29 points and falling 131, the Dow Jones Industrial Average lost 105.90 points, or 0.7%, to 15,070.18. The S&P 500 index retreated 9.63 points, or 0.6%, to 1,626.73, with financials pacing the losses that included all but one of its 10 major sectors. The Nasdaq Composite shed 21.81 points, or 0.6%, to 3,423.56.

Two heavily-weighted sectors (energy and financials) lagged from the open and their weakness overshadowed the relative strength of defensive sectors. Contributing to the softness was news that the International Monetary Fund cut its 2014 growth outlook for the United States to 2.7% from 3.0%. The IMF also said the Federal Reserve's large-scale asset buying is warranted at least until year's end.

Among economic report expected for the day, the Labor Department reported on Friday that producer prices made a 0.5% monthly rise in May, the first positive reading in three months and exceeding forecasts for a 0.1% rise. Producer prices ended two consecutive months of declines and increased 0.5% in May after declining 0.7% in April. The consensus expected the PPI to increase 0.1%. The increase in producer prices was due almost entirely to higher food and energy costs. Food prices rose 0.6% in May after falling 0.8% in April.

Excluding food and energy, core prices rose 0.1% for a second consecutive month. That was exactly what the consensus expected.

Industrial production growth was unchanged in May after declining an upwardly revised 0.4% (from -0.5%) in April. The consensus expected industrial production to increase 0.1%.

The University of Michigan Consumer Sentiment Index dipped to 82.7 in the preliminary June report from 84.5 in May. The consensus expected the index to fall to 83.0. The Expectations Index rose to 76.7 in June from 75.8, which is the highest point since November 2012. The Present Conditions Index fell to 92.1 from 98.0 in May.

Bullion metals ended higher on Friday, 14 June 2013 at Comex. Gold futures ended higher on Friday to eke out a modest weekly gain, buoyed by data showing a larger-than-expected rise in wholesale prices one day after a news report indicated that the Federal Reserve will try to calm fears over tapering its monetary stimulus program.

Gold futures for August delivery gained $9.80, or 0.7%, to settle at $1,387.60 an ounce in Nymex floor trading. Prices ended 0.3% higher for the week. Gold traded as high as $1,390.40 earlioer during the day.

On Friday, July silver rose 32 cents to close at $21.95 an ounce, and copper for July delivery picked up 1 cent to trade at $3.20 a pound. That left silver up nearly 1% for the week.

Crude-oil futures jumped on Friday, 14 June 2013 at Nymex as traders eyed rising tensions in the oil-rich Middle East. Crude for July delivery rose $1.16, or 1.2%, to settle at $97.85 a barrel on the New York Mercantile Exchange. Intraday, the contract climbed as high as $98.25. Prices gained 1.9% for the week. The contract advanced on Friday primarily due to headlines about Syria's civil war.

Decliners ran ahead of advancers on the New York Stock Exchange, where nearly 626 million shares traded. Composite volume neared 2.9 billion.

Indian ADRs ended mostly higher on Friday. In the IT space, Infosys was up 0.9% and Wipro was down 0.8%. In the Banking space, HDFC Bank was up 0.7% and ICICI Bank was up 1.1%. In the Telecom space, Tata Communication was up 3.2%. In other space, Tata Motors was up 1.4%, Dr Reddys was up 1.3% and Sterlite was down 0.3%.

For the year, the Dow, Nasdaq and S&P 500 are trading higher by 15%, 13.4% and 14.1% respectively. On Monday, the June Empire Manufacturing Survey and June NAHB Housing Market Index will be reported at 8:30 ET and 10:00 ET, respectively.

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First Published: Jun 17 2013 | 9:25 AM IST

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