THE PIGS AMERICAN MARKET NEWS OF THEDAY........
MARKET SNAPSHOT: U.S.Stocks End Lower, Pressured By Oil, Financials
August 13, 2008:04:46 PM EST
U.S. stocks ended in the red Wednesday, weighed downby a rebound in oilprices and ongoing worries about the financial sector sparked by MerrillLynch'sdowngrades of several banks.
The Dow Jones Industrial Average (DJI) fell109.5 points to 11,532, with onlyfive of its components finishing in positive territory.
Financials led the blue-chip decliners.Shares of Bank of America (BAC)fell7.3%, Citigroup (C) dropped 3.9%and American Express (AXP) fell3.1%.
Shares of General Motors Corp. (GM) dropped 7.6% after Moody's InvestorsService lowered the company's corporate family rating to Caa1 from B3with anegative outlook.
The S&P 500 index (SPX) ended down 3.76points, or 0.3%, at 1,285 points andthe Nasdaq Composite (RIXF) finished down 2 points to 2,428.
There was "a solid decline in financialsacross the board," said Marc Pado,U.S. market strategist at Cantor Fitzgerald.
"There is a deep-seated concern there," Padosaid. Also, "you got a prettydecent pop in crude and the market has been keying off of crude thelast severalweeks."
Oil prices ended higher for the first time infour sessions after the U.S.Energy Department reported declines in crude, distillate and gasolinesuppliesfor last week.
September crude closed at $116per barrel, up $2.99, or 2.7%.
Wednesday's volume was light, with 1.2billion shares traded on the New YorkStock Exchange, where declining stocks outnumbered those advancing 17to 13. Onthe Nasdaq, 822 million shares traded, with advancers outpaceddecliners 14 to13.
Financials sell off
"The financials [are] really what sold off,"saidArt Hogan, chief marketstrategist at Jefferies & Co. Merrill Lynch's (MER) downgrades of severalinvestment banks put the sector under selling pressure, Hogan said.
Merrill Lynchanalyst Guy Moszkowski downgraded on Wednesday Citigroup,Goldman Sachs Group (GS) and LehmanBrothers Holdings to underperform, accordingto media reports. Moszkowski also lowered Morgan Stanley's (MS) rating toneutral.
Separately,Richard Bernstein,chief investment strategist at Merrill Lynch,said that "the credit crisis is broad, deep and global, and it is notlikely toend soon."
"The problems in the financial sector appearto us to be far from over, and weare skeptical that trying to bottom-fish will prove to be profitable,"Bernsteinsaid in a research report Wednesday.
Weak retail sales data, rising import pricesand cautious earnings outlooksfrom Deere & Co. (DE), LizClaiborne (LIZ) and Macy's (M) also dented sentimentWednesday.
"The economic data, taken in total, were notthat good, with Deere missingnumbers and concerns still about lingering inflation, with the importpriceindex still fairly high," saidPaul Nolte, directorof investments at HinsdaleAssociates.
"Again, we still have some of the overhangfrom yesterday in the financials,"citing the broad-based selling in the sector Tuesday on Wall Street.
J.P. Morgan Chase's (JPM) $1.5 billionwrite-off, Wachovia's (WB)wider-than-originally-reported second-quarter loss and reduced earnings estimatesforGoldman Sachs Group all dragged onU.S. stocks in Tuesday's session.
Lackluster retail sales
Earlier, the Commerce Department estimatedthat U.S. retail sales dropped 0.1%in July, not as bad as the 0.3% forecast by economists. Falling autosalesoffset an increase in gasoline sales.
"Fortunately, gasoline prices have fallensince July, which is giving theconsumer some relief," saidNigel Gault, chief U.S.economist at Global Insight,in a note. "But the consumer is still under enormous pressure asemployment isdeclining, real wages are down, housing and stock-market wealth aredown, andcredit conditions continue to tighten."
In other economic news, the Labor Departmentreported that U.S. import pricesrose by 1.7% in July, mostly on prices for imported petroleum andnatural gas.
Separately, U.S. inventories for June rose0.7%, compared with analystexpectations of a 0.6% increase, and the inventory-to-sales ratio fellto arecord-low reading of 1.23.
On the earnings front Wednesday, Deere warnedthat rising raw materials willimpact margins in the current quarter. Shares of the tractor makerdropped 3.2%..
After falling earlier in the session, sharesof Macy's (M) rebounded to end up1.9% as the department-store operator said second-quarter profitdipped, hurt byrestructuring costs and consumer cutbacks on discretionary purchases.Thecompany also lowered its full-year projection, saying it's difficult toforecastfuture results against the current economic backdrop.
Shares of Liz Claiborne (LIZ) dropped 11.6% after the company cutits earningsoutlook.
On the rise, shares of chipmaker Nvidia (NVDA) rallied 10.8% as investorslooked past the company's $121 million loss to anincreased stock buyback of $1billion and its prediction of margin improvement.
On the deals front, CVS Caremark (CVS) said it will buy Longs DrugStores (LDG) for $2.9 billion, or $71.50 ashare, a 32% premium over Longs' closingprice on Tuesday. .
Oil led a broad rebound in the commoditiessector, with the Reuters/JefferiesCRB Index (CRB), a benchmark gauging the prices of major commodities,rising2.4%.
December gold closed at $831.50an ounce, up $16.90, or 2.1%, on the New YorkMercantile Exchange. The contract recouped some ground after fallingalmost 12%during an eight-session losing streak.
In currency trading, the dollar hit thehighest since at least March againstthe euro and other major currencies. The dollar index (DXY), whichmeasures thegreenback against a basket of currencies, rose to 76.24 in NorthAmericantrading, the highest since March, from 76.13 late Tuesday.
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