NEW YORK, Feb 11 — The S&P 500 posted its biggest daily percentage decline thus far in 2012 yesterday after an about-face on Greece’s long-awaited debt deal ended a five-week streak of gains for equities.
All but one of the 30 Dow components ended lower while all 10 S&P sectors fell, with cyclical sectors such as energy, financials and materials the biggest losers.
The CBOE Volatility index, often referred to as Wall Street’s “fear index,” jumped 11.6 per cent, its biggest percentage rise in three months.
An agreement finally came this week but almost immediately ran into problems when European leaders called for additional austerity measures and some Greek lawmakers said they would not support the deal.
Greek Finance Minister Evangelos Venizelos said the nation needs to reach a decision within days on accepting the terms of a bailout.
“Investors are trying to determine how disruptive this could end up being, and if you want to be invested in a group like financials, you need to be very careful in your positioning,” said Duncan Richardson, chief equity investment officer at Eaton Vance in Boston. “There’s still a lot of concern out there, and that gets amplified by any setback like this.”
Shares of Bank of America Corp fell 1.3 per cent to US$8.07 (RM24.44) while manufacturer Caterpillar lost one per cent to US$111.75. Alcoa Inc slid 3.3 per cent to US$10.29.
The Dow Jones industrial average was down 89.23 points, or 0.69 per cent, at 12,801.23. The Standard & Poor’s 500 Index was down 9.31 points, or 0.69 per cent, at 1,342.64. The Nasdaq Composite Index was down 23.35 points, or 0.80 percent, at 2,903.88.
Some analysts said they saw yesterday’s decline as just a pause in an overall higher trend. Even with the day’s decline, the benchmark S&P 500 index is up 6.8 per cent since the start of the year and remains at seven-month highs.
“There are plenty of reasons the market would want to take a pause here,” Richardson said. “A 20 per cent rise since October is reason to be cautious, especially since volatility has fallen so much since then.”
For the week, the S&P fell 0.2 per cent and yesterday’s losses snapped a three-day string of gains. The Dow fell 0.5 per cent for the week while the Nasdaq fell less than 0.1 per cent.
US consumer sentiment data also weighed on the market. The Thomson Reuters/University of Michigan overall index of consumer sentiment fell to 72.5 in early February from January’s 75.0, which was the highest level since February 2011.
Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said 80 per cent of New York Stock Exchange stocks were trading above their 200-day moving average, a sign of overbought conditions.
On the Nasdaq, Expedia fell 1.8 per cent to US$33.54, a day after delivering disappointing results.
Earnings have been lacklustre this season, with the fourth-quarter profit growth rate for the S&P 500 now at 8.9 per cent. However, excluding Apple Inc, the overall growth rate is at 5.8 per cent, according to Thomson Reuters.
Among rising stocks, LinkedIn Corp surged 18 per cent to US$89.96 a day after issuing an upbeat first-quarter outlook that prompted at least three brokerages to raise their price targets on the stock.
Almost three-fourths of stocks traded on the New York Stock Exchange fell yesterday while on the Nasdaq, about 72 per cent of issues ended in negative territory.
Volume was light, with about 6.67 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 7.84 billion. — Reuters
