Dow closes lower for fifth straights ession
U.S. stocks ended lower on Monday, 27 January 2014 in a volatile session as worries over emerging-markets currencies unsettled investors. Stocks began the day on a higher note following upbeat results from Caterpillar, but fell after home sales data showed a larger drop in December than anticipated.
Stocks displayed gains at the open but the early strength faded during the initial hour as the Nasdaq headed into the red. The other indices followed suit and the broad retreat continued until when stocks reversed and spent the afternoon in a steady climb. Moderate selling pressure returned during the final hour, knocking the indices off their afternoon highs.
The Dow Jones Industrial Average closed down for the fifth-straight session. The blue-chip index opened higher, buoyed by upbeat earnings and forecast from Caterpillar but closed 41.23 points, or 0.3%, lower at 15,837.88. The Nasdaq Composite was the worst performing index on Monday. The tech-heavy index lost 44.56 points, or 1.1%, to 4,083.61. The S&P 500 ended the session 8.73 points, or 0.5%, lower at 1,781.56.
Although there was no news responsible for the turn, the morning selling coincided with a strengthening yen while the session low in equities matched the high point for the Japanese currency. Once the yen began weakening again, a rally in equities ensued. Similarly, the selling observed during the last 30 minutes of action coincided with the yen gaining strength once again.
Upbeat results from Caterpillar initially lifted the Dow, but gains were capped amid broad-based selling. Shares of Caterpillar, seen as an economic bellwether for global activity, rose 5.9%.
Among other stocks under focus, Shares in KB Home fell 2.7%. Shares in Google fell 2% after the company said it bought artificial-intelligence company DeepMind. Samsung Electronics and Google also signed a long-term cross-licensing deal on technology patents.
Apple shares slid more than 5% afterhours, as the tech group missed analysts forecast on sales of iPhones, even though earnings per share beat estimates.
There is still some anxiety in the market place on Monday, as a few emerging market currencies are under stress, including the Argentine peso, the South African rand and Turkish lira. Asian and European stock markets sold off on Monday, following Wall Street's lead on Friday. Prompting the secondary currencies to sell off are concerns about a financial system liquidity problem that has developed in China, and following China's disappointing economic data released last week.
There are also worries in the market place early this week that the U.S. Federal Reserve will continue to reel in its easy-money policy this week, which ostensibly soaks up some liquidity in the world market place, starting with the periphery currencies. Tuesday and Wednesday the Federal Reserve's Open Market Committee (FOMC) meets to set its monetary policy. There is a general belief, albeit not a clear consensus, that the Fed will do another $10 billion tapering of its monthly bond-buying program, also called quantitative easing.
In other overnight news, there was an upbeat German Ifo business confidence index report on Monday. The index hit its highest level in two and one-half years and continues a string of upbeat economic data coming out of the European Union.
Today's economic data at Wall Street was limited to the December New Home Sales, which fell 7.0% to 414,000 from a downwardly revised 445,000 (from 464,000) while the consensus pegged the reading at 457,000. Total sales in 2013 increased 16.3% to 428,000 from 368,000 in 2012. That was the most new homes sold since 485,000 sales registered in 2008.
Bullione once again ended in a mixed mode on Monday, 27 January 2014. Gold futures on Monday logged their first loss in three sessions, but finished above the day's lows as a generally weaker U.S. stock market helped support demand for the precious metal. Traders awaited an upcoming two-day meeting of the Federal Open Market Committee that begins on Tuesday and are looking ahead to the week's U.S. economic data calendar, which includes reports on durable-goods orders and consumer confidence on Tuesday and manufacturing and consumer-sentiment figures on Friday.
Gold for February delivery shed 90 cents, or 0.1%, to settle at $1,263.40 an ounce on the Comex division of the New York Mercantile Exchange after earlier falling under $1,260. Last week, prices scored a 1% gain and ended Friday. Over the past five weeks, gold has climbed 5%. March silver hung onto gains, rising nearly 3 cents, or 0.1%, to $19.79 an ounce following a 2.7% loss last week.
Crude prices ended lower at Nymex on Monday, 27 January 2014. Analysts at Bank of America Merrill Lynch said they hold a moderately negative stance on global oil this year as the market moves from being relatively balanced to slightly oversupplied.
March crude fell by 92 cents, or 1%, to close at $95.72 a barrel on Nymex. Oil prices fell 0.7% on last Friday, but rose 2.4% last week.
Treasuries finished on their lows with the benchmark 10-yr yield up five basis points at 2.77%.
Participation was a bit above average as 764 million shares changed hands at the NYSE.
Tomorrow, December Durable Orders will be released at 8:30 ET while the November Case-Shiller 20-city Index and January Consumer Confidence will cross the wires at 9:00 ET and 10:00 ET, respectively.
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