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Friday, 3 January 2014

US stocks fall on new year's first day of trade

US stocks Thursday kicked off the new year in the red, falling decisively in a sell-off that analysts chalked up to profit taking following solid gains in 2013.

NEW YORK: US stocks Thursday kicked off the new year in the red, falling decisively in a sell-off that analysts chalked up to profit taking following solid gains in 2013.

The Dow Jones Industrial Average fell 135.31 points (0.82 per cent) to 16,441.35.

The S&P 500 declined 16.38 (0.89 per cent) to 1,831.98, while the tech-rich Nasdaq Composite Index gave up 33.52 (0.80 per cent) at 4,143.07.

Markets were closed Wednesday in observance of the New Year's Day holiday.

Analysts said investors likely took the first day of trading of 2014 as an opportunity to rebalance portfolios after markets surged last year, pushing the S&P 500, a broad measure of the markets, up nearly 30 per cent.

A typical strategy is to wait to rebalance until a new tax year, said Sam Stovall, chief investment officer at S&P Capital IQ.

"The thought is you probably take some of those profits and redeploy them in areas that did not do as well in the prior calendar year," Stovall said.

The retreat came despite reports that showed the strongest US construction spending in four years and a solid reading on US manufacturing activity. Tempering that data was a mediocre report on Chinese manufacturing activity, Stovall said.
Technology giant Apple shares fell 1.4 per cent after Wells Fargo downgraded the stock on concerns about its profit-margin outlook.

Online professional networking service LinkedIn lost 4.2 per cent after Citigroup cautioned that tracking information on LinkedIn activity suggested "near-term caution" on the stock.

Bank of America jumped 3.4 per cent after Citigroup upgraded the stock. Bank of America is well-positioned as a "play" on a US economic recovery due to its "exposure" to its US consumer base, Citi said.

Martha Stewart Living Omnimedia vaulted 8.8 per cent after it and retailer Macy's announced a settlement of Macy's lawsuit alleging Stewart violated a merchandising agreement by striking a deal with retail rival J.C. Penney. The terms of the settlement were not disclosed. Shares in Macy's were unchanged.

Bond prices rose. The yield on the 10-year US Treasury bond fell to 2.99 per cent from 3.03 per cent Tuesday, while the 30-year dipped to 3.92 per cent from 3.96 per cent. Bond prices and yields move inversely.

1 comment:

  1. SINGAPORE: Investing in Singapore equities this year may not yield returns as favourable as investing in US, Europe and Japan stock markets.

    This is according to DBS Bank, which is neutral on Singapore equities in 2014.

    Most Southeast Asian economies are likely to face pressure from weaker commodity prices and slower growth in consumption from developed markets.

    With the US Fed tapering its quantitative easing measures this month, cost of funding could also increase.

    Worries over China’s growth outlook will continue to cast uncertainties in the market, and this could affect several Singapore-listed stocks with exposure to the region.

    Lim Say Boon, chief investment officer for Group Wealth Management at DBS Bank, said: “Singapore companies that are listed on the Singapore Stock Exchange, their earnings are driven largely by domestic earnings or regional's earnings, meaning Southeast Asia earnings are dependent on China's growth, economic activities. They are likely to mirror the prospects of the Asia region, rather than the developed markets.”

    - CNA/gn


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