CHICAGO, April 11, 2011 /PRNewswire/ -- Stock Market Today report brought to you by Zacks Investment Research. Concerns about a possible government shutdown coupled with record high crude prices jolted the stock markets on Friday, as commodities touched new highs. Crude prices touched a 30-month high, spreading significant concerns over the economy recovery derailing and investors kept away from big bets ahead of the earnings season.
The Dow Jones Industrial Average (DJIA) closed at 12,379.90, shedding 0.2% and the Standard & Poor 500 (S&P 500) dropped 0.4% to end at 1,328.15. The Nasdaq lost 0.6% and finished the day at 2,780.41. For the week, the Dow was the only gainer and was up 0.3% with both the S&P 500 and the Nasdaq shedding 0.3%. The CBOE Volatility Index dropped below 17 on Friday, yet another day which witnessed tight volumes. On the New York Stock Exchange (NYSE), Amex and Nasdaq, volumes were a mere 6.47 billion shares, well below last year's estimated daily average of 8.47 billion.
The Obama government and the Congress failed to reach an agreement over the Budget for the rest of the fiscal year and led to the possibility of a government shutdown after 15 years. Democrats and the Republicans had each other to blame for the scenario and while Democrats cited federal funding for birth control to be a reason for disagreement, the Republicans referred to the spending cuts as the issue.
The shutdown would not only affect 800,000 federal government employees but the economy at large has significant reasons for worry. It is being speculated that economic data from the Commerce Department or the Bureau of Labor Statistics may feel the burn as results from the agencies might be delayed or may not be made available. Fear of a shutdown comes during the critical season of tax preparation and filing, which may lead to a delay in tax refunds. Such a development may also cripple the economic recovery.
Hopes of an economic recovery were also affected by surging crude prices which posted a new 30-month high. Fighting in Libya intensified, raising fresh concerns about oil supplies. Before the violence, Libya accounted for 2% of the global daily oil output. Since the outbreak of violence on February 18, crude supply has been heavily affected and with no respite forthcoming, crude production is likely to face further disruption. US light crude for May delivery gained $2.49 and settled at $112.79, the highest close since September 2008. The NYSE Arca Oil Index was up 0.6%, NYSE Arca Natural Gas Index dipped 0.2% while the Philadelphia Oil Service Index ended flat.
Higher crude prices helped to push up energy shares but dragged the transport sector lower. For the energy sector, shares of Suncor Energy Inc. (NYSE:SU), Nabors Industries Ltd. (NYSE:NBR) and Murphy Oil Corporation (NYSE:MUR) gained 3.3%, 3.5% and 2.6%, respectively. Airlines stocks were dragged lower, including JetBlue Airways Corporation (NASDAQ:JBLU), Delta Air Lines Inc. (NYSE:DAL), United Continental Holdings, Inc. (NYSE:UAL) and AMR Corporation (NYSE:AMR) and they shed 4.3%, 3.9%, 5.8% and 4.5%, respectively.
Surging crude prices, inflationary worries and declining dollar have pushed investors to opt for commodities as a hedging instrument. At the Comex division of the New York Mercantile Exchange, gold for June delivery surged $14.80 to $1,474.10 an ounce and posted the biggest weekly gain in four months. Gold prices also gained strength from euro-zone debt worries as Portugal is slated to receive an international bailout package. Silver rose $1.05 to settle at $40.62 an ounce and recorded 31-year new high while copper was up 2.5%.
With no major economic data being released on Friday, barring one report, the markets failed to recover any losses. The Department of Commerce reported a 1% rise in wholesale inventories for February, which was in line with expectations.
Concerns in the broader market pushed the technology sector into the red as an upbeat outlook from Seagate Technology PLC (NASDAQ:STX) failed to push the sector higher. Shares of Seagate Technology surged 7.8% and its rival Western Digital Corp. (NYSE:WDC) gained 2.7%. Shares of Expedia Inc. (NASDAQ:EXPE) climbed 13.0% after it disclosed plans to split into two companies. However major shares like Hewlett-Packard Company (NYSE:HPQ), Dell Inc. (NASDAQ:DELL), Microsoft Corporation (NASDAQ:MSFT), Cisco Systems, Inc. (NASDAQ:CSCO), Juniper Networks, Inc. (NYSE:JNPR) and NVIDIA Corporation were on the declining side and they lost 0.9%, 1.8%, 0.5%, 1.5%, 1.4% and 3.0%, respectively.
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