January 31, 2013
U.S. stocks ended the day with modest losses as GDP unexpectedly contracted in the fourth quarter, raising concerns over sustainability on economic recovery. The Dow fell 0.32 percent, while the S&P 500 and the NASDAQ retreated 0.39 percent and 0.37 percent, respectively.
Indeed, recent economic data revealed mixed signals in the economy as jobs reports indicated robust environment, whereas growth and housing data disappointed investors, coming worse than earlier estimates. Meanwhile, the Fed said it will maintain asset buying program in the face of weaker economic activity. However, most of the bellwether companies released better results, curbing steep losses in the markets.
On the corporate side, Union Pacific Corp. tumbled 2.7 percent to $131.17. Facebook lost 1.4 percent to $30.81 as earnings weakened in the last quarter. General Electric Co. and Exxon Mobil Corp. had the biggest declines in the Dow. Fossil Inc. fell 2.4 percent to $104.11. Research In Motion Ltd. plunged 12 percent.
European stocks drifted lower as U.S. GDP shrank and incoming corporate earnings indicated weaker projections, spurring investors to sell equities from 23- month high. The Stoxx Europe 600 Index fell 0.6 percent to 288.63 in London.
The greenback slumped to the weakest since November 2011 versus the euro after the Federal Reserve said it will keep buying $85 billion of securities a month to boost the economy. In the meantime, easing horizon for banking sector and diminishing costs of borrowing restored confidence over euro across the board. The common currency climbed to 1.3570 vs. the dollar, signaling more upward momentum for near future.
March crude added 37 cents, or 0.4%, to settle at $97.94 a barrel on the New York Mercantile Exchange as the buck lost further and the Fed will continue its dovish stance to galvanize the economy.
Gold futures jumped $19.10, or 1.2%, to settle at $1,679.90 an ounce on the Comex division of the New York Mercantile Exchange as GDP contracted, dollar weakened and the Fed maintained its current stance on the monetary policy, prompting buying spree on the precious metal as safe haven.
Today, we will pay close attention to weekly jobless claims, personal income and outlays, employment cost index and Chicago PMI to find direction in the markets ahead of all important employment situation due tomorrow.
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