Wall St ends flat, late selloff in banks

Wall St ends flat, late selloff in banks
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First Published: Thu, Nov 18 2010. 11 23 AM IST
Updated: Thu, Nov 18 2010. 11 23 AM IST
New York: Investors were unable to recoup recent losses in the market on Wednesday, suggesting the struggles recently experienced by stocks are far from over.
A late-day selloff did not inspire confidence. Volume was light and early buying faded, as financials led the market downward. The S&P 500 is down nearly 4% since 5 November after rallying nearly 13% in September and October.
“I think the market is in a deterioration trend. It’s worrisome at this point, considering that we had a selloff yesterday with pretty big volume and poor advance-decline numbers,” said Frank Gretz, market analyst and technician at the Shields & Co brokerage in New York.
“The market is certainly vulnerable, and I think it is in fact headed for a correction.”
Financials sagged after the Federal Reserve said it will evaluate the ability of 19 large financial institutions to withstand losses in “adverse” economic scenarios.
The announcement accompanied guidance on potential dividend increases, first reported on 4 November. Banks rallied sharply that day and were still up 1% in the past two weeks before Wednesday’s selloff.
The KBW bank index fell 1.4%. Regional bank KeyCorp slid 3.8% to $7.68 after Credit Suisse downgraded its shares.
Indexes also suffered from the continued uncertainty of Ireland’s financial crisis, which contributed to Wall Street’s drop of nearly 2% on Tuesday.
The Dow Jones industrial average was off 15.62 points, or 0.14%, to 11,007.88. The Standard & Poor’s 500 Index edged up 0.25 point, or 0.02%, at 1,178.59. The Nasdaq Composite Index added 6.17 points, or 0.25%, to 2,476.01.
Volume was light and some of the day’s quietness was due to investors awaiting the pricing of General Motors’ initial public offering after the market’s close, said Nick Kalivas, senior equity index analyst at MF Global in Chicago.
The automaker set the terms for a landmark IPO that could be the largest in US history, raising up to $22.7 billion. GM said after the closing bell the stock was priced at $33 a share.
“There’s a feeling a lot of money has been sucked out of the market to go pay for that. Once that gets out of the way, that theory’s going to be put to the test,” said Kalivas.
Retailers kept a floor under the market as discount chain Target Corp rose 3.9% to $55.62 after it forecast its best same-store sales in three years during the upcoming holiday season. The S&P consumer discretionary group rose 0.7%.
Investors kept a close eye on the situation in Ireland. Dublin agreed to work with a European Union-International Monetary Fund mission on urgent steps to shore up its shattered banking sector.
The CBOE Volatility index, Wall Street’s so-called fear gauge, declined 3.6% but remained above 20. On Tuesday, it closed at its highest point in more than a month.
In economic data, housing starts slumped to their lowest level in more than a year in October, while consumer prices rose, but the annual increase in core CPI was the smallest on record.
About 7.19 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by 1,807 to 1,182, while on the Nasdaq, advancers beat decliners 1,374 to 1,245.
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First Published: Thu, Nov 18 2010. 11 23 AM IST
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