The stock market posted a broad based decline today as all three major U.S. indices dropped more than 1 percent. The (Dow Jones Industrial Average) lost 146 points, or 1.2 percent, to 12,145 while the NASDAQ Composite experienced a slide of 1.4% to 2,588 and the S&P 500 withdrew 1.25% to end Wednesday at 1,249 points.
UPDATE: After trading settled for the day, the final index figures heading into Thursday are as follows: Dow Jones: 12,151.41 — NASDAQ: 2,589.98 — S&P 500: 1,249.64
Today’s trading action lessened the chances that all three indices will end the 2011 calendar year in positive territory, as the S&P 500 index and Nasdaq Composite are both now in the red compared to last year’s close.
ECB Balance Sheet Tops $3.5 Trillion
The Euro ended the day valued at less than $1.293 versus the U.S. Dollar as investors turned their attention to the European Central Bank’s debt load, which has now topped $3.5 trillion following last week’s €489 billion emergency fund loan approval to struggling Eurozone banks. Jens Kramer of NordLB in Hanover was quoted by the San Francisco Chronicle today saying, “The market reaction is slightly incomprehensible. After that record liquidity injection it would follow that the balance sheet would swell. Seeing the figure in black and white, and the fear of what would happen to the ECB if a country defaulted, may have spooked the market.”
David Mann of Standard Chartered Plc. in New York also commented on today’s market reaction, telling BusinessWeek.com, “We’re still so far from being out of the woods that even on a day of being positive, people decided that the euro should continue to fall. It’s quite a sharp rise in the ECB balance sheet. It’s concern about monetization already on the way in Europe.”
Italy’s sovereign bond yields fell sharply from 6.5% to 3.25% on six-month debt following a successful auction on Wednesday that raised over €10 billion in capital for the dwindling government coffers. Ten-year Italian bonds are scheduled to be auctioned off tomorrow. However, investors remain wary of European sovereigns while preferring U.S. debt – as Treasury yields once again fell below 2.00% today – ending the session at 1.91% for ten-year notes.
Several nations within the European Union are facing a decrease in government revenue and an increase in borrowing costs. Spain and Portugal could the next countries to face a sovereign debt crisis similar to what transpired in Greece if they are unable to balance their respective federal budgets.
Crude Oil Prices Fall Below $100 Per Barrel
Although crude oil prices had experienced a surge in recent days, the price per barrel fell below $100 in afternoon trading, down to $99.55 at market close. Gold ended the day down $35.00 to $1,561.50 per ounce while silver lost over 5 percent – down to $27.20 per ounce.
Cliffs Natural Resources Acquires Magnetite Project
Shares for Cliffs Natural Resources (NYSE:CLF) declined more than 4.6% during trading today to $61.95 Wednesday afternoon. The mining and natural resources company acquired Atlas Iron’s magnetite project located in Australia for $18 million plus an undisclosed royalties percentage.
Cliffs’ stock price has fallen approximately 20 percent Year To Date and is nearly 40% removed from its annual high of $101 per share from July. Cliffs Natural Resources has a Market Capitalization of $8.89 billion with an EPS of $13.14 and a P/E ratio of 4.73.
Mosaic Falls Near YTD Lows
Mosaic Co. (NYSE:MOS) shares retreated 4 percent to $50.18 by the end of trading on Wednesday. The crop nutrient distributor was valued above $88.00 per share in mid-February but has seen its market value steadily decrease since then. The company’s Market Capitalization is $22.41 billion with an Earnings Per Share of $6.14 and a Price to Earnings ratio of 8.18.
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