Stock Market News for July 1, 2010 - Market News

The final day of the second quarter witnessed choppy trading and stocks fell sharply, drawing curtains on the worst second quarter since 2002.  It was another late-day retreat yesterday as investors tried to balance sentiments between an improved European bank outlook and a weak jobs report. 

Major stock indexes added to the hefty losses from the previous session, falling at least 1%, on a dour private sector jobs report.  Coming before the Labor Department’s monthly nonfarm payrolls data, the ADP report confirmed that labor markets are yet to show signs of stabilization. 

During the quarter the S&P 500 index lost nearly 12% and the Dow average dropped 10% - registering their worst quarterly decline since the financial crisis.  The S&P 500’s slide below the 1,040 mark was particularly concerning as it raised questions about the index’s next stop.  Year-to-date, the Dow average is down 7.7%. The Nasdaq and S&P 500 are both down 9% for the year.

The April-June period saw all ten S&P500 industry sectors moving lower, led by declines in basic materials (-14.7%), oil and gas (-13.1%), financials (-12.4%) health care (-11.5%), industrials (-11.3%), consumer services (-10.8%), technology (-10.3%), consumer goods (-9.0%), telecommunications (-5.8%), utilities (-4.3%).  The 21% plunge in housing stocks during the quarter reflected concerns about the housing sector.

The decline was broad based yesterday, with all but one DJIA component closing the day in the red.  Alcoa AA led the declining components, dropping 2.7%, hurt by China growth concerns and the continuing strength in the US dollar.  Shares in 3M MMM gained on the company’s favorable second-quarter sales outlook.  General Mills GIS, not a Dow component, dropped 3.7%, after the company’s fourth-quarter profit dropped 41%.  Shares in Ford F jumped 2% after the company said it will cut its outstanding debt by another $4 billion; this is in addition to its April announcement to reduce total debt by $3 billion.  The company said it is on track for solid profit this year. 

Treasury yields dropped significantly during the quarter.  At the beginning of the quarter the yield on the benchmark 10-year note was nearly 4% and it dropped to near 2.94% as the quarter came to a close.  Gold prices advanced $1.70 to $1,244.10 an ounce Wednesday, for a 12% quarterly gain.
 
Nevertheless, the ECB’s announcement that an offering of 3-month loan witnessed weaker-than-expected demand soothed some concerns that European banks are in a mess.  Notwithstanding a Moody’s warning that it had put Spain’s AAA rating on review, the country’s offering of $4.3 billion 5-years topped its Treasury's targets.