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Stock Market News for February 15, 2012

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Benchmarks recouped their losses and moved into green territory during the closing moments of Wednesday after Greek debt talks promised a positive outcome. The indices had slipped into the red during the initial hours of trading following news that the 17 euro-zone finance ministers had cancelled a meeting. Disappointing retail sales data released by the Commerce Department’s had also dampened the mood. However, after Greek leaders promised to implement strict austerity measures, benchmarks erased all the losses closing the day on a positive note.

The Dow Jones Industrial Average had slipped 87 points during yesterday’s trading session, before rebounding during-- the final hours to close 0.1% higher at 12,890.46. The Standard & Poor 500 edged up 0.2% to close Tuesday’s trading session at 1,351.95. The Nasdaq Composite Index gained 0.4% and finished at 2,927.23. The fear-gauge CBOE Volatility Index (:VIX) had crossed the 20 mark during the day, but after positive during the closing hours it receded back to settle at 19.54. The decliners had an upper hand over the advancing stocks on the New York Stock Exchange (:NYSE), with 62% stocks declining as against 35% advancers. The remaining 3% of the shares were left unchanged. Total volume on the NYSE was 3.9 billion shares.

Markets had opened after news came in that the 17 euro-zone finance leaders had scrapped their meeting scheduled for Wednesday. The meeting scheduled for Wednesday was to approve the bond-swap deal between Greece and its private creditors that would slash €100 billion from Greece’s debt burden. Earlier, speaking about the Greek debt crisis, German Chancellor Angela Merkel had said: “Time is running out”, and surely it is, as the swap deal must be finalized by 20th of next month. Greece is in dire need of the over $170 billion of bailout money, failing to receive which it is likely to default on debt leading to its exit from the euro.  Since this would adversely impact the entire global financial system, investors’ frenzy was justified.

However, the markets made a late-hour comeback as reports suggested that Greek leaders have agreed to commit to the strict measures by Wednesday. A Greek official was quoted as saying that the political leaders are going to promise by Wednesday that they would implement the austerity measures, event tough they entailed deep spending cuts so that Greece can secure the next tranche of financial aid.

Domestic data failed to spark any rally, as retail sales data came in slower than expected. According to the Commerce Department: “Advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $401.4 billion, an increase of 0.4 percent (±0.5%)* from the previous month and 5.8 percent (±0.7%) above January 2011”. The 0.4% expansion fell short of consensus estimates of 0.7%.

However, despite the slower-than-expected expansion, the retail sector edged higher with the SPDR S&P Retail (XRT) increasing 0.8%. Interestingly, retail sales increased month on month, and the data was being compared with that recorded in December, the month of holiday sales. Among the retailers, J.C. Penney Company, Inc. (NYSE:JCP), Priceline.com Inc (NASDAQ:PCLN), Ascena Retail Group Inc (NASDAQ:ASNA), Office Depot, Inc. (NYSE:ODP) gained 0.9%, 1.0%, 0.9% and 0.7%, respectively.


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