Stock Market News for January 13, 2010 - Market News

U.S. stocks fell in a broad-based selloff after reports that the Obama administration is planning a fee on financial services companies and a disappointing profit report from Alcoa unnerved investors.  Chevron’s profit warning and news that the Chinese central bank is tightening the monetary policy in that country also weighed on investor sentiments.

Yesterday, the Dow Jones industrial average broke its four-day winning streak, closing down 0.3% at 10,627. The S&P500 broke a six-day winning run, closing down almost 1% at 1,136.  Tech-heavy Nasdaq fell 1.3% to 2,282.  Market breadth was negative. On the New York Stock Exchange, declining issues beat those that advanced by a seven-to-three margin on volume of 1.1 billion shares.

All but one S&P500 industry sectors ended in the red, led by basic materials (-2.1%), oil and gas (-1.6%), financials (-1.4%), technology (-1.3%), and consumer services (-1.0%).  Only consumer goods shares showed some strength, edging up 0.1%.

Alcoa (NYSE:AA) plunged 11.1% and led the list of declining issues on the DJIA, after it reported quarterly numbers that were well below analysts’ expectations.  Also adding to the gloomy mood were Bank of America (NYSE:BAC) and JP Morgan (NYSE:JPM), off 3.4% and 2.3%, respectively, on news that the administration is planning to mop up $120 billion in banking fees to be disclosed in Thursday's budget proposal.  Bank of America (NYSE:BAC) led the financial shares lower.

Crude prices, meanwhile, plunged 2.1% to $80.76 after China's move to reign in lending stoked concerns that demand would take a hit there.  Weather forecasts suggesting a reprieve from the massive cold spell in the US also hurt oil prices.  The American Petroleum Institute's weekly inventory data revealed a 1.2 million build in crude stockpiles; this morning the government's inventory post is estimated to show a 1.4 million barrel increase.

Waning risk appetites sent Treasury prices higher.  A record $40 billion auction of 3-year notes generated good demand, with a bid-to-cover ratio of about 2.8; over the past ten sales the ratio has averaged 2.78.  The yield on the 10-year Treasury note declined to 3.72% from 3.82% late Monday.

This morning's Fed comments included remarks from Philadelphia President Plosser, saying the current employment scenario should not derail rising interest rate plans, and from Atlanta Fed President Fisher, noting less accommodative policies should be undertaken to avoid inflationary gains.

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