Market Wrap for Thursday, February 21: Stocks Fall For Second Day

The stock market continued to undergo a correction on Thursday, although losses were contained. Investors are worried about a falling euro, along with the potential effects on the economy if mandatory spending cuts go into effect.

The concern has triggered a two-day sell off and a rise in volatility expectations. Nevertheless, the market is still up more than 5 percent in 2013.

Major Averages

The Dow Jones Industrial Average fell 47 points, or 0.34 percent, to 13,880.

The S&P 500 shed almost 10 points, or 0.63 percent, to close at 1,502.

The Nasdaq Composite registered a loss of 33 points, or 1.04 percent, to 3,131.

Initial and Continuing Claims

Initial claims rose from 342,000 for the week ending February 9 to 368,000 for the week ending February 16. This compared to expectations for an increase to 358,000.

Continuing claims rose from 3.137 million for the week ending February 2 to 3.148 million for the week ending February 9. This compared to consensus estimates of 3.150 million.

CPI

For the second month in a row, the CPI index was flat for January. This compared to consensus estimates calling for a small increase of 0.1 percent.

On a core basis, which excludes volatile food and energy costs, prices rose by 0.3 percent. This was the largest monthly increase since May 2011. The consensus had expected core CPI to increase by 0.1 percent.

Leading Indicators

The Conference Board's Index of Leading Indicators registered an increase of 0.2 percent for January compared to a rise of 0.5 percent in December. This was just below consensus estimates calling for an increase of 0.3 percent.

Commodities

Late in the equity session on Thursday, crude oil prices had tumbled for the second straight day. At last check, NYMEX crude futures were down more than 2 percent to $93.04 while Brent crude contracts had lost roughly 1.50 percent to $113.82. Natural gas fell more than 1 percent and was last trading at $3.24.

Despite overall weak risk appetite, precious metals managed to avoid losses. At last check, COMEX gold futures were up 0.04 percent to $1,575.90 and silver futures were flat at $28.63.

Both corn and wheat fell on the session, with corn futures losing around 1.50 percent and wheat falling almost 3 percent on the day. Soft commodities were mixed on the day with cocoa adding around 1 percent, coffee close to flat and sugar down better than 1 percent.

Bonds

Late in the session, the iShares Barclays 20+ Year Bond ETF (NYSE:TLT) was up around 0.51 percent to $116.86. The gains in bond prices caused yields to fall on Thursday.

The yield on the 2-Year Note was down by one basis point to 0.25 percent while the yield on the 5-Year lost two basis points to 0.84 percent.

The yields on the 10-Year Note and 30-Year Bond lost three basis points to 1.98 percent and 3.17 percent, respectively.

Currencies

The U.S. dollar rose again on Thursday with the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, adding around 0.40 percent.

The closely watched EUR/USD was down around 0.87 percent to $1.3170 at last check. Other notable movers included the USD/JPY, which lost 0.56 percent, and the USD/CAD, which added 0.28 percent.

Volatility and Volume

After a big jump on Wednesday, the VIX continued to rise on Thursday. The widely watched index climbed around 4 percent to close at 15.28.

Volume was higher than usual once again as traders face the first real volatility of the year. Around 146 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 129.5 million.

Stock Movers

VeriFone Systems (NYSE:PAY) fell almost 43 percent after the company released disappointing quarterly financial results and forward-looking guidance which was well below Wall Street consensus.

Repros Therapeutics (NASDAQ:RPRX) climbed around 25 percent after the FDA told the company to proceed with a study of a treatment to normalize testosterone and luteinizing hormone levels in men and accepted additional enrollment in another study of the drug.

Berry Petroleum (NYSE:BRY) jumped around 19 percent after the company agreed to be bought by Linn Energy (NASDAQ:LINE) in a deal valued at $4.3 billion, including debt.

Safeway (NYSE:SWY) rose around 14 percent after the company released bullish Q4 earnings results.

RF Micro Devices (NASDAQ:RFMD) fell around 11 percent after Qualcomm (NASDAQ:QCOM) released a competing micro chip. The stock was also downgraded at Raymond James.

Parker Vision (NASDAQ:PRKR) surged more than 73 percent after a Florida district court ruled in favor of the company on most key issues in a Markman hearing for its patent case against Qualcomm.