Stock Market News for March 12, 2015 – Zacks Investment Research
Markets extended Tuesday’s losses to end in negative territory yesterday as investors remained concerned about the possibility of a mid-year interest rate hike. Moreover, U.S. dollar continued to gain strength against euro and its other rivals. While, the S&P 500 and Dow finished at their lowest level since Feb 2, the Nasdaq declined to its lowest level since Feb 11.
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The Dow Jones Industrial Average (DJI) declined nearly 0.2% to close at 17,635.39. The Standard & Poor’s 500 (S&P 500) lost 0.2% to 2,040.24. The tech-laden Nasdaq Composite Index closed at 4,849.94; also decreasing 0.2%. The fear-gauge CBOE Volatility Index (VIX) gained 1.1% to settle at 16.87. A total of about 3.41 billion shares were traded on Wednesday on NYSE. Advancers outpaced declining stocks on the NYSE. For 56% stocks that advanced, 41% declined.
Fears regarding sooner-than-expected interest rate hike continued to weigh on benchmarks on Wednesday which in turn continued to boost U.S. dollar against major currencies. Speculations are steadily rising that the Fed will consider a rate hike in June banking on improving labor market conditions. Analysts are also expecting that the Fed will start the rate hike process by dropping the ‘patient’ phrase after the upcoming Federal Open Market Committee (FOMC) meeting that is scheduled to begin on Mar 18. The Fed has maintained its stance to remain ‘patient’ on rate hike for long time and is expected to change its position on the issue.
The euro is the major currency which has declined the most against the dollar in recent times. The euro declined further to trade below $1.06 on Wednesday, reaching its lowest level since 2003. Continuous decline in euro raised the possibility that the two currencies are moving towards parity in the not-too-distant future. The European Central Bank’s (ECB) quantitative easing program that has already started to drag down bond yields in Eurozone is cited as the most important factor behind euro slide. Meanwhile, the dollar also rose 0.2% against the yen. The dollar reached an eight-year high against yen on Tuesday.
Separately, the price of WTI crude oil declined further to lowest level in a month after the U.S. Energy Information Administration (EIA) reported that commercial crude oil inventories rose by another 4.5 million barrels to 448.9 million barrels in the week ending Mar 6. Inventories have remained at the highest level in almost 80 years for a long time. The price of WTI crude oil declined nearly 0.3% to $48.17 per barrel. However, rise in Brent crude oil offset the decline in WTI crude oil to boost energy shares on Wednesday. The price of Brent crude oil gained 2% to $57.54 a barrel.
The Energy Select Sector SPDR (XLE) rose 0.3% yesterday. Key energy stocks including EOG Resources, Inc. (EOG – Analyst Report), Chevron Corporation (CVX – Analyst Report), Chesapeake Energy Corporation (CHK – Analyst Report) and Marathon Petroleum Corporation (MPC – Analyst Report) gained 0.4%, 0.6%, 3.3% and 0.8%, respectively.
In company news, shares of Tyson Foods, Inc. (TSN – Analyst Report) declined 5.6% after media reports flashed another suspected avian flu breakout at Arkansas, where Tyson, the largest meat producer has its headquarters. As per Reuters, a case of bird flu was suspected by United Stated Department of Agriculture in a turkey flock in a farm in Arkansas. Tyson was the biggest decliner among the S&P 500 companies on Wednesday.
Decline in Tyson’s stocks price dragged down the Consumer Staples Select Sector SPDR (XLP) by 0.8%. The sector was the biggest loser among the S&P 500 sectors. Key stocks from the sector including Wal-Mart Stores Inc. (WMT – Analyst Report), The Coca-Cola Company (KO – Analyst Report), Pepsico, Inc. (PEP – Analyst Report) and ConAgra Foods, Inc. (CAG – Analyst Report) lost 1.1%, 1.5%, 0.9% and 1%, respectively. Seven out of the 10 S&P 500 sectors registered losses on Wednesday.
Meanwhile, shares of Salix Pharmaceuticals Ltd. (SLXP – Analyst Report) jumped 7% following news that Endo International plc (ENDP – Analyst Report) offered to acquire the company for around $11 billion. It was reported that Endo has offered to pay $175 per share, a 11% premium over Tuesday’s closing price. Salix had already agreed to be acquired by Valeant Pharmaceuticals International, Inc. (VRX – Analyst Report) in a deal, valuing at around $10 billion or $158 per share. Shares of Endo and Valeant dropped 1.4% and 3.9%, respectively.
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Stock Market News for March 12, 2015 – Zacks Investment Research
