Better-than-expected earnings by Cisco Systems failed to reduce stock market worries concerning the European crisis, the Middle East and the fiscal cliff.
A disappointing report on retail sales and concern about an Israeli air strike in Gaza reduced investor enthusiasm on Wednesday morning as worries outweighed good news. Although a better-than-expected earnings report from Cisco Systems (NASDAQ:CSCO) caused the stock to gain 7.8 percent in pre-market trading, the news was overshadowed by disappointing European economic reports and a Eurozone-wide protest against austerity. Anxiety about the fiscal cliff continued to underlie the other issues of the day that continue worrying the stock market. Chart courtesy of Stockcharts.com
As of 2:40 EST, the Dow Jones Industrial Average sank 109 points (0.86 percent) to 12,646. The S&P 500 Index fell 0.76 percent to 1,364 – staying below its 50-day moving average of 1,431 and its 200-day moving average of 1,381 (NYSEARCA:SPY). As the S&P 500 remains below its 200-day moving average after a triple top (see green bar on chart) there is a serious risk that the index could make a further decline. The Nasdaq Composite declined 0.65 percent to 2,865 (NASDAQ:QQQ). The Russell 2000 Index took a 1.11 percent nosedive to 780 (NYSEARCA:IWM).
The “Dollar Bull” Index ETF (NYSEARCA:UUP) declined by 2 cents (0.09 percent) to 22.19 as of 1:29 EST.
As of 1:20 EST, the S&P 500 Volatility Index – or VIX – advanced 1.86 percent to 16.96. However, the VIX Short-Term Futures ETN made an 0.86 percent decline to 34.55 (NYSEARCA:VXX).
The major European stock market indices made significant declines on Wednesday as a Eurozone-wide protest against austerity accompanied more bad news about the Greek economy. The Euro STOXX 50 Index finished Wednesday’s trading session with a 0.81 percent decline to 2,472 (NYSEARCA:FEZ). The Euro STOXX 50 Index remained below its 50-day moving average of 2,516. The FTSE 100 Index dropped 1.11 percent to 5,722 (NYSEARCA:EWU). The German DAX Index sank 0.94 percent to 7,101 (NYSEARCA:EWG). France’s CAC 40 Index fell 0.89 percent to 3,400 (NYSEARCA:EWQ). Spain’s IBEX 35 Index declined 0.27 percent to 7,673 (NYSEARCA:EWP). Italy’s FTSE MIB Index declined 0.52 percent to 15,252 (NYSEARCA:EWI). Euro Stocks Down into Close as Greek Fears Weigh
As of 1:42 EST, the euro advanced 0.35 percent against the dollar, trading at $1.2749 (NYSEARCA:FXE).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced by $1.07 (1.00 percent) to $108.41/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) -0.74% as the escalating Middle East conflict, the European crisis and the fiscal cliff maintain a spirit of bearishness in the U.S. stock market. Over the Edge in a Fiscal Cliff Free Fall
SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ) +0.16% completely diverging from the performance of the Euro STOXX 50 Index, which declined 0.81 percent following disappointing economic reports from Greece and Portugal, as well as widespread protests against austerity measures.
SPDR Select Sector Technology ETF (NYSEARCA:XLK) -0.29% despite the better-than-expected earnings report from Cisco Systems.
iShares Barclays 20+ Year Treasury Bond Fund (NYSEARCA:TLT) -0.09% recovering from an early morning decline as the afternoon release of the FOMC minutes enhanced anxiety among bond traders. Learn More About iShares
SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) -0.65% as ongoing worries about the fiscal cliff combine with worries about escalating Middle East conflict and the European crisis to make Wednesday a “risk off” day.
Bottom line: Wednesday’s worries inhibited any enthusiasm investors may have felt as a result of the better-than-expected earnings report from Cisco Systems, as the major stock market indices made significant declines.