Markets ended in negative territory for second-consecutive day as intensified concern about Greece’s debt negotiations continued to hurt investor sentiment. Moreover, China’s disappointing trade data also had a negative impact on benchmarks on Monday. However, rise in oil prices limited some of the day’s losses.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) declined 0.5% to close at 17,729.21. The Standard & Poor 500 (S&P 500) lost 0.4% to close at 2,046.74. The tech-laden Nasdaq Composite Index closed at 4,726.01; decreasing 0.4%. The fear-gauge CBOE Volatility Index (VIX) jumped 7.3% to settle at 18.55. A total of about 6.2 billion shares were traded on Monday, below last five sessions’ average of 7.8 billion. Decliners outpaced advancing stocks on the NYSE. For 57% stocks that declined, 40% advanced.
On Sunday, Greek Prime Minister Alexis Tsipras announced that the government will not ask for extension of its bailout program from creditors. This announcement came after the Eurozone’s officials asked Greece’s government on Friday to apply for an extension of its bailout program by Feb 16. Tsipras’ announcement increased the odds of “Grexit” to a great extent. Moreover, Standard & Poor’s decision to push the country’s sovereign rating further into junk territory is a reflection of this risk.
In his speech, Tsipras said: “The new government is not justified in asking for an extension… Because it cannot ask for an extension of mistakes.” He also added: “The Greek people gave a strong and clear mandate to immediately end austerity and change policies… Therefore the bailout was first cancelled by its very own failure and its destructive results.”
Meanwhile, China’s General Administration of Customs reported that exports declined 3.3% year over year in January, following a 9.7% rise in December. Moreover, the economy witnessed a 19.9% drop in January’s imports, wider than December’s decline of 2.4%. This has resulted in higher trade surplus for January at $60 billion compared with $49.6 billion in December. The data indicated that the world’s second-largest economy is having difficulty in reviving its economy as both foreign and domestic demand is experiencing serious weakness.
The Health Care Select Sector SPDR (XLV) was the biggest decliner among the S&P 500 sectors. The sector declined 1.2% on Monday. Key healthcare stocks including AbbVie Inc. (ABBV – Analyst Report), Alexion Pharmaceuticals, Inc. (ALXN – Analyst Report), Regeneron Pharmaceuticals, Inc. (REGN – Analyst Report) and Actavis plc (ACT – Analyst Report) lost 2.5%, 2.4%, 1.8% and 1.5%, respectively.
Separately, the Energy Select Sector SPDR (XLE) emerged as the only gainer among the S&P 500 sectors on Monday as oil prices gained for third-consecutive day. The prices of WTI crude oil and Brent crude oil rose 2.2% and 0.9% to $52.86 per barrel and $58.34 a barrel, respectively. The sector gained 0.1% yesterday following rise in oil prices. Key energy stocks including Marathon Petroleum Corporation (MPC – Analyst Report), Chevron Corporation (CVX – Analyst Report), Halliburton Company (HAL – Analyst Report) and Baker Hughes Incorporated (BHI – Analyst Report) rose 1.3%, 0.8%, 0.4% and 0.3%, respectively.
In company news, shares of McDonald’s Corp. (MCD – Analyst Report) declined 1.4% after reporting a decline of 1.8% in global comparable sales in January. The company said that weak demand in Asia was one of the main reasons behind disappointing results. However, Hasbro Inc.’s (HAS – Analyst Report) shares jumped 7% after announcing a year-on-year increase of 8.9% in fourth quarter adjusted earnings per share to $1.22. The company also reported net revenue of $1.30 billion which increased 1% year over year.
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