New York, September 9th (TradersHuddle.com) – Stocks tumbled logging their fifth loss in six sessions and ending near the lows of the day. The Dow Jones Industrial Average tumbled more than 300 points on raising fears over a worsening EU debt crisis, and after investors were skeptical of President Obama’s jobs plan and its chances in congress. The resignation of a key ECB policymaker over disagreement on the central bank’s bond buying program and rumors that Greece will default this weekend spooked investors out of equities, amid a big drop in the Euro-Dollar.
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The Dow Jones Industrial Average tumbled 303.68 points, or 2.69%. The SP 500 index lost 31.67 points or 2.67%, while the NASDAQ fell 61.15 points, or 2.42%.
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For the week, the blue chip index lost 2.21%; the SP 500 Index fell 1.68% and the NASDAQ dropped 0.50%.
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The market started pressure amid overseas weakness and after President Obama’s $447 billion jobs plan failed to spur risk takers into action. Sellers were in control at the start of the session on renewed worries over a global slowdown and the ability of U.S. policymakers to be able to prevent the world’s biggest economy from falling into another recession.
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In Asia, stocks ended lower after China’s inline CPI data, which dropped month over month, failed to cheer participants. Worries of a slowdown and a possible recession after Federal Reserve Chairman Ben S. Bernanke yesterday stopped short of detailing new plans to boost growth, while European Central Bank President Jean-Claude Trichet said downside risks for the region’s economies have risen, weighed on sentiment. Shanghai closed near unchanged following the CPI figure and after Moody’s commented that China’s CPI is likely to trend lower for the remainder of the year.
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In Europe, markets closed sharply lower after a resignation of a top policymaker of the European Central bank over disagreements with the bank’s policy of buying euro zone government bonds, signaled a rift inside the central bank at a key moment EU leaders are trying to contain the debt crisis affecting the region. Losses got amplified by rumors that Greece would be defaulting over the weekend and by the gloomy global economic outlook, with President Obama’s $447 billion jobs plan failing to inspire confidence.
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The selloff accelerated at midday after a report said that Germany was preparing plans to shield its banks should Greece default, spurring a flurry of rumors surrounding the possibility of a default as soon as this weekend. The stocks closed near the lows of the session with all of the Dow components ending in negative territory and all of the key SP 500 sectors posting declines. Energy, materials, and financials were posting the biggest losses, with even defensive sectors like consumer staples and utilities experiencing sharp declines.
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Fears over a worsening EU debt crisis and a possible default from Greece sparked a selloff in European banks, which were also under earlier pressure following a downgrade to the space by Goldman Sachs. Deutsche Bank (NYSE:DB) plunged 8.71% to $31.14, closing below its calculated support at $32.52. The German banking giant was under pressure despite an upgrade to a Buy from Add at WestLB.
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Bank of America (NYSE:BAC), the largest U.S. lender, fell 3.06% to $6.98 following European counterparts lower and a aster Robert W. Baird cut its target price to $11 from $12. The stock however receiving some sort of support from comments from Tim Geithner, suggesting that the President’s plan will have a meaningful impact on growth and on reports the bank was contemplating 40,000 jobs to be cut in its next step of the streamline plan that the company put in place earlier in the week after a management shakeup. Bank of America has calculated support at $6.80 and resistance at $8.80.
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In other brokerage calls in the sector, SunTrust (NYSE:STI), the super regional banking holding company with operations in the Mid-Atlantic and the Southeast, tumbled 4.20$ to $18.25 despite being upgraded to Outperform from Market Perform at Raymond James. Shares of SunTrust closed 5.59% above calculated support at $17.23.
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Not even defensive sectors were spared, as consumer staples fell sharply. McDonald’s (NYSE:MCD), the world’s largest restaurant chain, tumbled 4.04% to $85.03, posting one of the biggest percentage declines in the Dow Jones Industrial Average, after August comparable sales missed expectations.
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Materials suffered on concerns over faltering demand and as the euro got crushed versus the Dollar, falling thru key technical levels at $1.38 to trade below the $1.37 level. Based metals suffered, with copper prices tumbling 3.45%, while precious metals also fell.
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After choppy trading gold gained 0.2% to $1859.5 an ounce. Despite numerous economic and EU debt concerns the strength of the Dollar capped the bullion’s move to the upside. Meanwhile, silver shed more than 2% to $41.62 an ounce. Silver Wheaton (NYSE:SLW), the largest metal streaming company in the world, fell 2.09% to $39.85 following lower prices for the silver bullion. Silver Wheaton closed 2.8% above calculated support at $38.72.
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Vulcan Materials (NYSE:VMC), the construction aggregates maker, tumbled 7.88% to $31.81, posting one of the biggest declines in the SP 500 and in the sector, as participants were skeptical that Obama’s jobs plan, which included infrastructure spending, will pass congress as it was presented, as the President failed to provide details of how he intends to pay for the stimulus.
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United States Steel (NYSE:X), the integrated steel producer with operations in North America and Europe, was also among the stocks posting the biggest declines in the sector. Shares of U.S. Steel dropped 5.55% to $27.40 as economic concern, greenback strength, and lack of confidence in the President’s plan on infrastructure spending weighed on steelmakers.
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In the tech land, Apple (NASDAQ:AAPL), the maker of iPads and iPhones, was able to outperform the broad market index, falling 1.73% to $377.48 after trading as high as $386. According to Ticonderoga its supply chain checks indicated that Apple sales in August rose 2.6% month over month, missing its historical average sales increase for August, but the firm noted the sales are coming in line with its expectations, due to the later refresh cycle for the iPhone this year. Ticonderoga has a target price on Apple above $600 per share. The stock was under pressure even after scoring a win in the patent wars against Samsung after a German court upheld a ban preventing the sale of Samsung’s Galaxy 10.1 tablets in Europe’s biggest economy.
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Sprint (NYSE:S), the third largest U.S. wireless carrier, ended unchanged, holding well amid the selloff after according to a report on Bloomberg TV, the company will offer Apple’s iPhone next month with unlimited data plan, making it the only carrier with unlimited data plan.
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Texas Instruments (NYSE:TXN), the maker of digital signal processing (DSP) and microcontroller (MCU) semiconductors, gained 1.09% to $26.08, posting one of the only gains in the SP 500 index, despite the company narrowing its third quarter EPS guidance and lowering its revenue guidance below consensus.
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Other chipmakers also showed strength, with Micron Technology (NASDAQ:MU), the dynamic random access memory chips maker, climbed 1.68% to $6.35, as the stock continued to extend its move above calculated resistance at $6.16.
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Meanwhile, VeriSign (NASDAQ:VRSN), the Internet infrastructure provider, plunged 14.4% to $29.03, closing below its calculated support at $29.14 and posting the biggest decline in the broad market index after the company said its CFO resigned.
