Stocks took another plunge Monday with the Dow average closing below 10,000 for the first time in three months as lingering worries about European government finances and a potential regulation spooked investors. In a sign that sentiments remain jittery, some better-than-expected profit reports were overlooked by market participants.
Also, German software maker SAP AG was in focus after its chief executive unexpectedly quit his post and the company said his contract would not be renewed.
The Dow Jones industrial average fell 103.84 points, or 1%, to 9908.39 as Bank of America (NYSE: BAC) led the index lower with a 3.5% drop. JP Morgan (NYSE: JPM) closed down 1.6%, to 37.70 and Wells Fargo, which is not a part of the Dow average, lost 3.6%. The tech-heavy Nasdaq closed off 0.7% and the broader S&P 500 index closed little changed.
Reports that European Union President Jean-Claude Trichet is cutting short a visit to Australia to attend a Thursday European Central Bank meeting that will possibly consider ways to provide Greece with some support has sent this morning’s stock futures higher. Ahead of the opening bell, Dow Jones industrial average futures rose 75, or 0.8%, to 9,970. Standard & Poor's 500 index futures rose 10.60, or 1%, to 1,066.50, while Nasdaq 100 index futures rose 16.25, or 0.9%, to 1,750.75.
Only two of the thirty DJIA components managed to close in the green yesterday. Home Depot (NYSE: HD) rose 2.2% after being upgraded by Morgan Stanley (NYSE: MS), and Hewlett Packard (NYSE: HPQ) closed up 0.6%, even as the tech sector eased 0.6%. Volume on the NYSE dipped to a modest 1.085 billion shares, with declining issues ahead of those advancing in price by a two-to-one margin.
The S&P500 suffered losses across all ten sector sectors. Financials, weighed down by debt issues in southern European nations, dropped 1.9%; basic materials 1.7%, utilities 1.1%, industrials 0.9%, oil and gas 0.8%, telecommunications 0.7%, tech 0.6%, consumer goods 0.5%, health care 0.4%, and consumer services 0.3%.
Strength in earnings reports as well as analyst upgrades were overlooked by investors, even as ExxonMobil (NYSE: XOM) was upgraded by Collins Stewart, Disney (NYSE: DIS) by JP Morgan (NYSE: JPM), Priceline.com (NASDAQ: PCLN) by Susquehanna, CME Group (NYSE: CME) by Jefferies, and Autozone (NYSE: AZO) by Citigroup (NYSE: C). CVS Caremark (NYSE: CVS) and Hasbro (NYSE: HAS) came out with better than estimated numbers but failed to contain the negative sentiment.
Yesterday, the greenback eased 0.04% against a basket of currencies. Crude prices closed up 70 cents to $71.89; and gold rose $13.40 to $1066.20. An uncertain global economy continued to weigh on basic material shares and the sector dropped 1.7%.
Among key earnings reports of the day are: Disney (NYSE: DIS), Coca-Cola (NYSE: KO), XL Capital (NYSE: XL), NYSE Euronext (NYSE: NYX), Molson Coors (NYSE: TAP), Baidu (NASDAQ: BIDU) and International Flavors and Fragrances (NYSE: IFF).
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