Stock Market News for April 1, 2011

Markets marked one of the strongest quarters of the decade with negligible movement in the indices as investors patiently await the job data from the Labor Department, scheduled for Friday. The indices faced a stiff challenge from global issues but survived the concerns to remain upbeat.

The Dow Jones Industrial Average (DJIA) gained the most among the benchmarks over the quarter, jumping 6.4%. The Standard & Poor 500 and Nasdaq followed the Dow, gaining 5.4% and 4.8%, respectively. The Dow was also the best performer for the month of March posting a gain of 0.8% while the S&P 500 and Nasdaq dropped by 0.1% and 0.04%, respectively. For the day, the Dow and S&P 500 slid 0.3% and 0.2% while the Nasdaq gained 0.2%. The trend of low volumes continued on the New York Stock Exchange, AMEX and Nasdaq with consolidated volumes touching 6.9 billion shares, well below last year’s daily average of 8.47 billion. The CBOE Volatility Index (VIX) remained almost flat and was below 18.

The quarter’s performance is particularly significant as it comes at a time of several challenges arising out of global geopolitical tensions. Just when the indices returned a sunny picture, with the Dow touching the psychological 12,000 mark, the markets were jolted starting February 18 due to violence in Libya. Violence in Libya intensified with rebels protesting against their leader Muammar Gaddafi, who in return vowed to fight till the end. Tension in Libya, a nation, which previously accounted for 2% of the global daily crude output, propelled crude prices to a 2.5- year high. Inflated crude prices have taken a toll on domestic consumers and the global economy alike. Fed officials commented on how the situation might turn for the worse globally and economists are concerned over the possibilities of crude prices touching $200 per barrel if the unrest spreads to Saudi Arabia.

Next in line to add to the woes was the massive earthquake and tsunami in Japan. The natural disaster damaged the markets and indices were shaken further by the ensuing Japanese nuclear crisis. Euro-zone debt woes also played a cameo as Portugal inches closer to seeking an international bailout package. However, positive economic data released amidst the tension factored in to help the indices regain some ground and the markets have turned in a strong quarterly performance.

A lot is at stake at the moment for the bourses as the economy awaits employment data from the Labor Department. Depending on the nature of these reports, the indices are likely to run either climb up or drop down. On Wednesday, Automatic Data Processing (ADP) had reported a considerable increase in private payrolls. The report said 201,000 new jobs had been created in the private sector over the month of March, in line with economists’ expectations. However, on several occasions in the past the ADP report has not matched the government’s job data.

New applications for weekly jobless claims fell less than expected, by 6000 to seasonally-adjusted 388,000 in the week ended March 26. Economists had expected initial claims to fall to around 380,000. However, this decline comes after claims for the previous week were revised up to 394,000 from the originally reported 382,000. The four-week average for weekly claims, considered to be a more accurate measure, rose by 3,250 to 394,250.

In another report, factory orders were down by 0.1% or $0.4 billion, to $446.0 billion in February contrary to expectations of an increase by 0.5%, following a 3.3% increase in January. Factory Orders are down following three consecutive monthly increases. Excluding transportation, Factory Orders increased by 0.1%.

On a sectoral basis, the retail and the technology sectors weighed on the broader market. Retailers were one of the worst performers on Thursday with the S&P Retail index dropping 0.8%. CarMax Inc. (NYSE:KMX) led the fall after dropping 7.2%. Among other retail shares, J. C. Penney Company, Inc. (NYSE:JCP), Best Buy Co. Inc. (NYSE:BBY), Lowe's Companies Inc. (NYSE:LOW) and RadioShack Corp. (NYSE:RSH) dropped 2.0%, 1.7%, 2.0% and 2.4%, respectively.

The slide in the technology sector was led by Intel Corporation (NASDAQ:INTC) after an analyst lowered the company’s target price citing a “downtick” in PC demand. The company’s shares dropped 1.4% and settled at $20.18. Among other tech stocks, Dell Inc. (NASDAQ:DELL), Cisco Systems, Inc. (NASDAQ:CSCO), Microsoft Corporation (NASDAQ:MSFT), Broadcom Corp. (NASDAQ:BRCM) and LSI Corporation (NYSE:LSI) shed 0.9%, 1.0%, 0.9%, 2.5% and 0.9%, respectively. Gainers for the sector included Google Inc. (NASDAQ:GOOG), Oracle Corp. (NASDAQ:ORCL) and Autodesk, Inc. (NASDAQ:ADSK) which rose 0.9%, 1.2% and 1.2%, respectively.

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