Market Overview

Stock Market News for February 1, 2010 - Market News


Stocks ended the first month of 2010 on a disappointing note as weaker earnings numbers and uncertainty about the fate of the economy prompted investors to pull money out of the market.  A better-than-expected gross domestic product data gave markets an initial boost but the advance petered out as companies continued to report downbeat earnings and investors parsed the GDP report for concrete signs of recovery.

Today, Asian markets hit their three month lows, with the Shanghai Composite index declining 1.6% and adding to its 8.8% January drop, as strength in China manufacturing data intensified fears of further tightening.  European bourses were also down as sovereign debt concerns continued after last week's S&P report that UK banks no longer remain among the world's most stable.

On Friday, markets overlooked Ben Bernanke’s re-election to the Fed, a blowout fourth-quarter GDP number that showed the economy grew at a 5.7% annual rate, the fastest in six years, and a slew of positive economic data.  S&P shares remained under selling pressure, with basic material (-2.6%), technology (-2.3%), and oil and gas shares (-1.4%), leading the decliners.  The index declined 1.6% on the week and is off 3.7% so far this year.  Basic material stocks have so far plunged 8.2% this year, reflecting concerns ranging from global issues to Beijing’s clampdown on excessive lending.

The Dow Jones industrial average ended down 53 points, or 0.5% and the broader S&P 500 index lost 11 points, or 1%.  The tech-heavy Nasdaq, hurt by the weakness in tech shares, fell 31 points, or 1.5%.

Technology stocks, meanwhile, continued to remain on a patchy ground as firms’ weak guidance and concerns over rich valuations sent the group to an 8.6% January drop.  Tech shares, up 48.5% over the past twelve months, have appeared ripe for profit-taking.  Microsoft's (NASDAQ:MSFT) CFO said it is still not experiencing much progress in corporations' tech spending.

The flight from riskier assets proved beneficial for the safe havens such as US Treasuries and the dollar.  The 10-year traded up 14/32 on Friday, as its yield dropped to 3.588%, down from a 3.630% yield at the beginning of the week.

Among today's key speeches, Treasury's Geithner testifies before the Senate Finance Committee, Volker is expected to deliver more on President Obama's planned structural changes to the banks, and the Treasury's Barr delivers the keynote address at the ASF 2010.  President Obama is slated to unveil a fiscal 2010 budget, estimated to hit a record $1.6 trillion deficit up from $1.4 trillion in 2009.

This week the Bank of England and European Union announce interest rate policies on Thursday, with the crucial US monthly non-farm payrolls report, due out on Friday.  Companies reporting their earnings include Anadarko Petroleum (NYSE:APC), ExxonMobil (NYSE:XOM), Gannett (NYSE:GCI), Humana (NYSE:HUM), and SYSCO Corp (NYSE:SYY).

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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