Stocks Ended Lower, as Tech Slumped (AAPL, AXP, CSCO, GOOG, HPQ, ICE, JCP, LOW, MSFT, NDAQ, NYX, QQQ, SLV, VLO)
New York, May 16th (TradersHuddle.com) – Stocks ended lower, as technology shares were dumped, with investors worrying about continuing woes over the European debt crisis, which could dampen economic recovery and spurring a move away from riskier assets. The Dollar finished lower, but trimmed its losses, with the U.S. Government reaching its legal debt ceiling.
The Dow Jones Industrial Average fell 47.38 points, or 0.38%. The S&P 500 index lost 8.30 points, or 0.62%, while the NASDAQ tumbled 46.16 points or 1.63%.
The market started modestly lower, as the Dollar gave up some of its earlier gains. The weak opening followed poor overseas performance in equity markets around the world on renewed European Sovereign debt concerns.
Asian markets finished lower after Japan provided mixed economic data, with machine orders much higher than expected, but consumer confidence much lower. Meanwhile China and Hong Kong also moved to the downside on inflation fears, as some economists predict that China has not seen a CPI peak yet.
European markets finished lower on news the IMF Chief was detained and was waiting arraignment. The CAC underperformed the other major bourses, as Mr. Strauss-Kahn was also rumored to be a leading French Presidential Candidate. There is little indication that the IMF activities will be curtail by his arrest, however jitters on the sovereign crisis increased, as it came very near talks on how to handle the euro zone crisis, as finance ministers are already discussing the next round of help for Greece and Portugal’s bailout.
The market actually made an attempt to move into positive territory, with the Dow moving into the green for some time midday, as the Dollar weakened and the euro regained some of the lost ground, but an upturn in the greenback and weakness in technology, the biggest sector by weight, dragged the market lower. The tech heavy NASDAQ was the notable underperformer with the index falling to a 1-month low and just above its 50day moving average. PowerShares QQQ Trust (NASDAQ:QQQ), the ETF that seeks to provide investment results that generally correspond to the price and yield performance of the NASDAQ-100 Index, fell 1.73% to $57.40, closing just above its 50day moving average at the $57.26 area.
Among the S&P 500 sectors, healthcare was the only sector finishing in positive territory with a fractional gain, while technology, consumer discretionary, and energy led the declines.
Technology as a group tumbled 1.5% during the session, with big cap tech among the weakest areas in the sector, with investors moving away from riskier assets. Apple (NASDAQ:AAPL), the maker of iPads and iPhones, dropped 2.11% to $333.30, closing lower than its pre-earnings close on April 19th and giving back more than its gap up after the spectacular quarterly earnings. The stock broke below its 50day moving average last week, spurring downward momentum on the stock, with next level of support at $320.16.
In the Dow Jones Industrial Average, technology also dragged the index lower, with the top three decliners coming from big tech companies. Microsoft (NASDAQ:MSFT), the world’s largest software publisher, lost 1.84% to $24.57, closing 3.22% from its calculated support at $25.36. Cisco (NASDAQ:CSCO), the world’s largest networking equipment maker, fell 1.66% to $16.60, closing below calculated support at $16.64, while Hewlett-Packard (NYSE:HPQ), the world’s largest PC maker, slid 1.51% to $39.80, closing 1.61% above calculated support at $39.16.
Google (NASDAQ:GOOG), the owner of the largest search engine, was another tech heavy weight out of favor in today’s session. Google fell more than 2% to $518.42, closing below its April low and trading at levels not seen since September. The company today also filed a mixed securities shelf offering for an indeterminate amount.
Consumer discretionary stocks also came under sharp pressure. The sector's 1.4% decline came as Lowe's Companies (NYSE:LOW), the second largest home improvement retailer, tumbled 3.57% to $24.84, a three-month low, following a disappointing quarterly report, which featured an earnings miss and disappointing forecast, as the retailer trimmed its full year earnings forecast.
JC Penney (NYSE:JCP), the department stores operator based in Plano, TX, was tumbled 3.20% to $37.21, after gapping up to a 2-year high at $41 following an upside earnings surpris, but the stock quickly rolled over.
Meanwhile, financials had lagged last week, but in today’s session the sector traded with relative strength for much of the session, finishing with a fractional loss. The sector received a boost from card metrics that showed improvements for credit card issuers from March to April.
American Express American Express (NYSE:AXP) gained 1.17% to $50.07, as the company said that its April U.S. Managed Net write-off rate was 3.5%, an improvement over the 3.7% rate in March, while April loans 30 days past due were 1.7%, showing a slight improvement from the 1.8% rate in March. American Express actually gapped up earlier in the session, with the stock posting a new 52-week high at $50.61.
Capital One (NYSE:COF) also was a notable outperformer in the sector and in the broad market index, as it gained 2.18% to $53.48 after significant improvements in its April Card Metrics. Capital One said that the April Domestic Annualized Net Charge-Off Rate was 4.97%; April Delinquency rate of 3.41% versus 3.59% in March.
Also on the financial sector, the NYSE Euronext (NYSE:NYX) plunged 12.62% to $35.73 on news that the NASDAQ OMX (NASDAQ:NDAQ) and the IntercontinentalExchange (NYSE:ICE) withdraw their proposal to acquire NYSE Euronext, following discussions with the Antitrust Division of the U.S. Department of Justice, which made it clear that the deal will not be successful in securing regulatory approval. Shares of NASDAQ OMX also suffered, falling 2.53% to $26.23, meanwhile InterncontinentalExchange jumped 3.30% to $122.22.
A drop in crude oil prices and gasoline futures pressured the energy sector. Crude oil settled lower by 2.3% to $97.37 per barrel. A selloff in gasoline futures, to the tune of 4.5%, weighed on crude oil throughout the afternoon session. A weaker Dollar had little bearing on crude's movement after it was unable to trade above the flat line.
Valero (NYSE:VLO), the independent refiner, fell 1.50% to $26.23, closing just above its calculated support at $26.18. Gasoline prices pressured the stock, as traders sold the futures on reports the opening of the Morganza Spillway, was reducing the risk of flooding in the refineries along the Mississippi River in Louisiana.
Weakness in the greenback initially helped precious metals move higher, but both metals pulled back, after trading to their respective highs, despite continued weakness in the greenback. June gold shed 0.2% to close at $1490.60 per ounce, while July silver fell 2.5% to end at $34.11 per ounce. The iShares Silver Trust ETF (NYSE:SLV), the fund that corresponds to the price of silver owned by the Trust less expenses and liabilities, tumbled 4.48% to $32.85, with the trust trimming its year to date gains to 8.85%, while extending its losses for May to 29.9%.
