FOX Business: The Power to Prosper
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A weak performance by several big technology firms, coupled with a round of gloomy global economic data, pushed stocks lower on Wednesday.
The Dow Jones Industrial Average fell 27 points, or 0.21%, to 12939, the S&P 500 dipped 4.6 points, or 0.33%, to 1358 and the Nasdaq Composite slipped 15.4 points, or 0.52%, to 2933.
The technology-heavy Nasdaq was the worst performer of the major stock-market averages. Computer heavyweight Dell (DELL) found itself under heavy pressure after posting disappointing quarterly results after the closing bell on Tuesday. Netflix (NFLX) also struggled on the day as traders worried about fresh competition in the video streaming space from Comcast (CMCSA).
Out of the Dow components, Wal-Mart (WMT) was the biggest drag on the heels of a steeper earnings-fueled decline in the prior session. Intel (INTC), Kraft Foods (KFT) and Bank of America (BAC) lagged behind as well.
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Some of the strongest performers of the day could be found in the energy sector. Indeed, Schlumberger (SLB) and Halliburton (HAL), two of the world's biggest oilfield servicing firms, both rallied. Certain consumer staples like General Mills (GIS), Kellogg (K) and Boston Beer Company (SAM), the maker of Samuel Adams beer, posted sizeable gains too.
Global Data Disappoint
Existing home sales rose 4.3% in January to an annual rate of 4.57 million units, the highest rate since May 2010. Economists had been expecting a 1.9% increase to an annual rate of 4.65 million units. The bigger-than-expected increase was partially a result of a significant downward revision in December to 4.38 million units from 4.61 million.
One possible bright spot is inventory falling to its lowest level since 2005, which economists said could help stabilize prices. The real estate market has continued to struggle as prices and demand have remained subdued. Economists have pointed to this a major sticking point for the broader economy.
China's manufacturing sector likely contracted for the fourth-straight month in February, according to the HSBC Purchasing Managers’ Index. That means that the world's second-biggest economy "remains on track for a slowdown," Hongbin Qu, the company's co-head of Asian economic research wrote in a note accompanying the report.
A fresh read on manufacturing in the eurozone proved to be equally disappointing. Markit's purchasing manager's index for the 17-member currency bloc fell to 49.7 in February from 50.4 in January. Meanwhile, Germany, the region's economic engine, saw its PMI fall to 50.1 from 51. Readings above 50 point to expansion, while those below indicate contraction.
The data "confirmed our view that the euro area is likely to see another contraction" in the first quarter, analysts at Nomura wrote in a note to clients following the report. "The headwinds from fiscal tightening and the sovereign debt crisis will continue to weigh on the near-term outlook."
The debt situation in Greece that appeared to be under control after European Union leaders approved a second bailout package for the country began unraveling to some extent on Wednesday. Fitch slashed the country's credit rating to "C" from "CCC," warning a default is "highly likely" in the near term.
The ratings company said that an exchange by private creditors of Greek bonds for new paper with a lower face value, a key component of the rescue package, "will, if completed, constitute a rating default." The other major ratings companies haven't weighed in yet on whether the exchange is tantamount to a default, meaning it remains unclear if insurance policies protecting against a default will be triggered. This has been cited by analysts as a major risk to European banks that write these policies.
Gold Notches 3-Month High
Commodities markets were mixed in choppy trading.
Gold rose $12.80, or 0.73%, to $1,771 a troy ounce. The precious metal now stands at its highest level since November 16 last year.
Elsewhere, the benchmark crude oil contract traded in New York ticked higher by 3 cents, or 0.03%, to $106.28 a barrel.
Wholesale RBOB gasoline climbed 0.57% to $3.088 a gallon.
Treasury yields fell slightly as traders bid up the asset. The benchmark 10-year note yields 2.007% from 2.066%.
European blue chips fell 0.89%, the English FTSE 100 slipped 0.2% to 5916 and the German DAX dipped 0.93% to 6844.
In Asia, the Japanese Nikkei 225 rallied 0.96% to 9554 and the Chinese Hang Seng rose 0.33% to 21549.