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Stock Market News for March 22, 2012

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Benchmarks struggled to find definite direction yesterday as the lack of news left them swinging between small gains and losses. By the closing bell, the energy sector had dented the S&P 500, while investors’ apprehensions about Hewlett-Packard’s decision of merging its printing and personal computing businesses dragged down the Dow. However, tech shares boosted the Nasdaq into the positive zone.

The Dow Jones Industrial Average (:DJI) dropped 0.3% to settle at 13,124.62. The Standard & Poor 500 (S&P 500) edged down 0.2% to finish yesterday’s trading session at 1,402.89. The tech-laden Nasdaq Composite Index was the only gainer among the other benchmarks and moved up by 0.04% to settle at 3,075.32. The fear-gauge CBOE Volatility Index (:VIX) was down 2.9% and finished at 15.13. Total volumes on the New York Stock Exchange was 3.58 billion shares. The advance-decline ratio on the NYSE was almost even, as for 48% of the gainers, 49% stocks traded lower. The remaining stocks were left unchanged.

Gains for the Nasdaq may seem meager, but on a day when other benchmarks finished in the red, it was the only benchmark to chalk up an increase. On that note, Nasdaq’s gains were important, thanks to technology shares. Not only yesterday, but even in the past the Nasdaq has outperformed the other benchmarks on a few occasions. On Monday in particular, the Nasdaq was boosted by an event that also played a role in sparking off the broader rally. Apple Inc. (NASDAQ:AAPL) settled over $600 a share, on Monday, for the first time in its history, and the uptrend was a direct result of its announcement which bolstered shareholders’ value. Apple announced a quarterly dividend of $2.65 per share, to be paid in the fourth quarter. Additionally, the company announced a three-year share buyback plan worth $10 billion, which will begin in fiscal 2013.

The technology sector has performed decently so far this year and has lent support to the markets’ uptrend. Yesterday, Nasdaq components like Adobe Systems (NASDAQ:ADBE), Autodesk, Inc. (NASDAQ:ADSK), Google Inc. (NASDAQ:GOOG), priceline.com Incorporated (NASDAQ:PCLN) and Netflix, Inc. (NASDAQ:NFLX) gained 1.2%, 1.5%, 1.0%, 1.0% and 4.4%, respectively.

Coming to the S&P 500, the index might have dropped a few points yesterday, but it is still hovering near four-year highs. Last Thursday, the S&P 500 had finished above 1, 400 for the first time since June 2008. Till yesterday, the S&P 500 had been able to sustain the 1, 400 level for five-consecutive-trading days. Yesterday the energy sector dragged the S&P 500 lower, but it still remained at high levels.

What dragged the energy sector lower was Baker Hughes’ (NYSE:BHI) projection of a declining profit margin in the first quarter. The energy major cited that the company’s transition to natural gas exploration from crude would hurt its business. Baker Hughes lost 5.8% to close at $45.04 a share, recording its lowest closing level since mid-December 2011. The Energy SPDR Select Sector Fund (XLE) was down 1.2% and shares including Halliburton Company (NYSE:HAL), Schlumberger (NYSE:SLB), Chevron Corporation (NYSE:CVX) and Western Refining Inc. (NYSE:WNR) lost 1.8%, 2.3%, 1.1% and 2.8%, respectively.

Meanwhile, Hewlett-Packard Company (NYSE:HPQ) ended up as a big loser among the 30 Dow components, dropping 2.2%. The company announced business restructuring plans, which did not go down well with investors. HPQ said it was planning to merge its printing and personal computer businesses. Meg Whitman, the company’s CEO, said: “By providing the best in customer-focused innovation and operational efficiency, we believe we will create a winning scenario for customers, partners and shareholders”. However, with shareholders remaining apprehensive about the move, the stock had to suffer a battering.

On the economic front the National Association of Realtors came out with data on existing home sales, reporting a 0.9% dip in February. Total existing-home sales dropped 0.9% to a seasonally adjusted annual rate of 4.59 million in February. This was lower than January’s revised figure of 4.63 million, but was higher than prior-year’s 4.22 million-units. Consensus estimates had projected that total-existing home sales would come in at 5 million. Lawrence Yun, NAR’s chief economist, said: “The market is trending up unevenly, with record high consumer buying power and sustained job gains giving buyers the confidence they need to get into the market”. However, this report had little impact on the benchmarks.


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