Thursday’s trading session saw stocks make a retreat after bad news from the banking sector reinforced risk aversion.
On Thursday, it was the banking sector’s turn to take the blame for stock market sluggishness. Banking stocks slid after the Federal Reserve reported that Citibank (NYSE:C) flunked its stress test, as did Zions Bancorporation (NASDAQ:ZION). Shares of Bank of America (Bank of America Corporation (NYSE:BAC)) fell 0.99 percent after the bank settled the suit brought by the Federal Housing Finance Agency (FHFA). Under the settlement terms of another lawsuit brought by the New York Attorney General, former Bank of America CEO Ken Lewis has agreed to a three-year prohibition against serving as an officer or director of any publicly-held company.
The Dow Jones Industrial Average (SPDR DJ Industrial Average (ARCA:DIA)) lost 4 points to finish Thursday’s trading session at 16,264 for a 0.03 percent dip. The S&P 500 (SPDR S&P 500 (ARCA:SPY)) retreated 0.19 percent to 1,849.
The Nasdaq 100 (PowerShares QQQ (NASDAQ:QQQ)) dropped 0.55 percent to finish at 3,563. The Russell 2000 (iShares Russell 2000 Index (ARCA:IWM)) declined 0.35 percent to 1,151.
In other major markets, oil (United States Oil Fund (USO)) jumped 1.14 percent to close at $36.50.
On London’s ICE Futures Europe Exchange, June futures for Brent crude oil advanced 63 cents (0.59 percent) to $107.55/bbl. (United States Brent Oil Fund LP (BNO)).
June gold futures declined $3.20 (0.25 percent) to $1,291.60 per ounce (SPDR Gold Trust ETF (ARCA:GLD)).
The transportation sector remained stuck in the mud during Thursday’s trading session, as the Dow Jones Transportation Average declined 0.24 percent to 7,411 (iShares DJ Transport Average Index (ARCA:IYT)).
In Japan, the exchange rate for the yen remained the dominant factor in stock market activity. Japanese stocks advanced as the yen weakened to 102.26 per dollar during the last hour of Thursday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (RYDEX CurrencyShares Japanese Yen (ARCA:FXY)). The Nikkei 225 Stock Average jumped 1.01 percent to 14,622 (iShares MSCI Japan (EWJ)).
Stocks declined in China after the National Bureau of Statistics reported the during the first two months of 2014, profits for Chinese industrial businesses rose only 9.4 percent, compared with a 17.2 percent increase during the same period last year. The Shanghai Composite Index dropped 0.83 percent to 2,046 (iShares FTSE/Xinhua China 25 Index (ARCA:FXI)). Hong Kong’s Hang Seng Index declined 0.24 percent to 21,834 (iShares MSCI Hong Kong (ARCA:EWH)).
In Europe, stocks made a slight advance, although ongoing concern about tensions in the Ukraine kept a lid on investors’ enthusiasm. The EURO STOXX 50 50 Index rose 0.11 percent to 3,133 – climbing further above its 50-day moving average of 3,084. Its Relative Strength Index rose from 56.71 to 57.18 (SPDR DJ Euro STOXX 50 (FEZ)).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,833 on Thursday, after a 0.19 percent decline to 1,849. Its Relative Strength Index (RSI) fell from 49.79 to 48.43. The MACD is dropping away from the signal line, suggesting that the S&P could continue its decline during the immediate future.
Consumer Discretionary (SPDR Consumer Discretionary Select Sector ETF (ARCA:XLY)): -0.48%
Technology: (SPDR Select Sector - Technology (XLK)): -0.36%
Industrials (Industrial Sector SPDR Trust ETF (ARCA:XLI)): -0.14%
Materials: (SPDR Materials Select Sector ETF (ARCA:XLB)): -0.28%
Energy (SPDR Energy Select Sector Fund (ARCA:XLE)): +0.81%
Financials: (Financial Select Sector SPDR Fund (ARCA:XLF)): -0.54%
Utilities (SPDR Select Sector - Utilities ETF (XLU)): +0.81%
Healthcare: (SPDR - Healthcare ETF (ARCA:XLV)): -0.22%
Consumer Staples (SPDR - Consumer Staples ETF (ARCA:XLP)): -0.07%
Bottom line: On Thursday, the banking sector took the blame for dragging stocks lower, after both Citigroup and Zions Bancorp flunked their stress tests and Bank of America settled the suit brought by the FHFA.
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