Fundamentals

Majority of U.S. Equities Fall For Third Day On Weaker Sentiment

U.S. Session Key Developments

• Weak Confidence Data Shows Investors’ Concern Over Recovery
• Record-Setting Treasury Auction Signals Rising Risk Aversion

The Dow Jones Industrial Average rose today but the S&P 500 and Nasdaq Composite finished lower as weak consumer confidence data showed investors are questioning the strength of the economic recovery.  Today, the Conference Board’s consumer confidence index unexpectedly fell to its lowest level in three-months and the weekly ABC Consumer Confidence fell from a week earlier.  This data caused for poor performance by consumer-discretionary shares which posted the largest decline of S&P stocks.  In addition to worse-than-expected confidence data, the U.S. Treasury auctioned a record $44 billion two-year notes that sold at a yield of 1.02 percent, the lowest since May 26.  The bid/cover ratio for the auction was the highest since 2007, and this high demand showed increasing risk aversion from investors and concern over the economic recovery.

DJIA 30                 9,882.17                   +14.21                         +0.14%
The Dow surprisingly closed higher led by increasing energy prices and improvement in its telecommunications sector.  Crude oil closed up 95 cents on the Nymex to $79.63, helping to drive Exxon Mobil, the world’s biggest energy company, higher by over 2 percent and Chevron up over 1 percent on the day.  The telecommunications sector moved higher after Well Fargo raised Verizon Communications to a stock that would “outperform” going forward.  IBM also helped the market rise higher after its board approved $5 billion in buyback funds.

S&P 500                  1063.41                     -3.54                           -0.33%
The S&P fell for a third consecutive day and has shed 36 points from its 52-week high on October 19.  Consumer-discretionary shares posted the largest decline as 6 of the 10 sectors fell today after the poor consumer confidence data in the morning.  Limited Brands, the owner of Victoria’s Secret, fell 8 percent after announcing its low expectations for sales in the coming month.  Shares of Polo Ralph Lauren and Abercrombie & Fitch also fell 4 percent and 3 percent respectively.

NASDAQ                 2,116.09                   -25.76                        -1.20%
The tech-heavy NASDAQ suffered its third consecutive decline and the largest drop of the three indices.  The technology sector, which accounts for nearly half of the index, suffered a 1.28% loss.  Apple shares fell over 2 percent, while Google and Research In Motion shares dropped over a percentage point each.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com