The CBOE Volatility Index soared 14% to more than 21, once again reflecting its volatile nature after the index swung many times over the past few days. The Dow Jones Industrial Average (DJIA) shed 1.39% to end at 12,056.96 and the Standard & Poor 500 ended the day at 1,306.18 after dropping 1.59%. The Nasdaq declined 1.61% to close at 2,737.41. On the New York Stock Exchange, NYSE Amex and Nasdaq, 8.67 billion shares were traded and volumes were above last year’s average. On the NYSE, decliners beat advancing stocks by a ratio of 3:1.
In his statement to the Senate Banking Committee, Federal Reserve Chairman Ben Bernanke said surging crude prices pose a threat to economic growth and commodity prices. Further, he gave no hint of any new measures to stimulate the economy, dashing the hopes of traders. However, Bernanke reassured the committee that crude prices will not derail domestic economic growth. He said the oil price spike can only modestly fuel consumer prices on a temporary basis. Bernanke was upbeat about the economy and said: “The combination of rising household and business confidence, accommodative monetary policy, and improving credit conditions seems likely to lead to a somewhat more rapid pace of economic recovery in 2011 than we saw last year.” But concerns about crude prices and unrest in the Middle East overshadowed Bernanke’s fairly upbeat assessment of the economy.
Tensions in Libya increased and concerns over the anti-government demonstrations spreading to other Persian Gulf nations further fuelled oil prices. U.S. light, sweet crude for April delivery surged to $100.30 a barrel which suggests higher energy and gasoline costs, thereby making consumers poorer. Fears abound about the royal family of Saudi Arabia facing a situation similar to that confronting Libyan leader Muammar Gaddafi and other Middle East nations including Egypt. If these fears turn into reality, crude prices are guaranteed to sky-rocket as Saudi Arabia is one of the largest producers of oil.
Tunisian border guards fired into the air on Tuesday as a crowd attempted to cross the border and escape the violence. Meanwhile, strong words from the US were sent across to Libya as Secretary of State Hillary Clinton reportedly said: "Libya could become a peaceful democracy or it could face protracted civil war." Gaddafi seemed defiant and was unwilling to bow down to public pressure or go into exile and his son Saif al-Islam cautioned the West from launching a military attack.
Latest domestic economic data brought some cheer as the Institute for Supply Management reported strong growth in the US manufacturing sector for February. The index jumped to 61, its highest level since 2004.
The Fifth Third Bancorp led financial lowers over reports that it was being investigated by the US Securities and Exchange Commission (SEC). The SEC has reportedly asked the company to provide information related to commercial loans and accounting. FITB ended the day at $13.95 after shedding 4.5%. JPMorgan Chase & Co. (NYSE:JPM - Analyst Report) also declined 2.3% after reports of its legal losses likely accounting up to $4.5 billion. The Goldman Sachs Group, Inc. (NYSE:GS - Analyst Report) also declined 1.5% after accusations of a former board member leaking inside information. Another key financial stock, Bank of America Corporation (NYSE:BAC - Analyst Report) also joined the decliners after shedding 2.5% to close at $13.93.
Automaker stocks shared the bad day as major stocks declined including General Motors Corporation (NYSE:GM), Ford Motor Co. (NYSE:F - Analyst Report), and Toyota Motor Corp. (NYSE:TM - Analyst Report). The gainers for the day include Boston Scientific Corporation (NYSE:BSX - Analyst Report) surging 5.0%, Lorillard, Inc. (NYSE:LO - Analyst Report), advancing 1.6% and Sonus Networks, Inc. (Nasdaq:SONS - Snapshot Report) which soared 33.3%. source zacks.com... For the latest updates PRESS CTR + D or visit Stock Market news Today
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