S&P500 drops after month of gains: Morning market insights

The New York Stock Exchange fell overnight, while after a month of gains, the S&P500 Index also dropped. With no major economic data being released overnight, investors looked to earnings results for leads. They found nothing to inspire confidence.

Intel (INTC:US) and International Business Machines (IBM:US) led a fall in technology equities as the reporting season continued in the US. The two global technology industry – before Google, Facebook and Apple came along – are targeting developing world as sales in recession-hit Europe drag. The personal computer market contracted for the first time for 11 years in the US, hurting Intel.

“Profits are lukewarm,” Nick Sargen, chief investment officer at Fort Washington Investment Advisors in Cincinnati, told Bloomberg.

“You get disappointments from some bellwether technology companies at a time when the market has had such a good run. We’re not bearish, but if we’re going to add to positions, we need a pullback.”

The S&P500 Index fell 0.41% to 1385.14 overnight. The Dow Jones Industrial Average was down 0.63%, or 82.79 points, to 13032.80. The NASDAQ Index lost 0.37%.

West Texas Intermediate (WTI) oil fell 1.47% to $US102.67 a barrel overnight.

Gold was down 0.70% to be trading at $US1639.60 an ounce.

The Australian dollar was down overnight, buying $US1.0354 at 8.25am AEST.

Europe

European share markets suffered falls overnight after Spain released data showing its banks had more problem loans than expected, sending the Madrid based IBEX 35 Index down and causing other European markets to follow.

The news added to worries over whether Spain might be forced to seek a bailout after all. Investors fled to the perceived safety of solid German government two-year debt sold at a record-low yield.

“It’s indicative of lingering anxieties among investors – the willingness to hold low yields,” Mark Luschini, chief investment strategist at Janney Montgomery Scott, told CNN Money.

More Spanish 10-year bond yields will be auctioned on Friday night.

The London FTSE 100 closed down 0.38% to 5745.29. The German DAX was also down 1.01% or 68.97 points to 6732.03. The European Stoxx50 index fell 1.66% to 2327.84.

US listed shares of Spanish oil company Repsol’s subsidiary, YPF SA (YPF:US) resumed trading overnight and plunged to a one-year low.  The Argentine government took control of the Spanish-owned oil and gas producer earlier in the week to cheers from Venezuelan President Hugo Chavez, who has nationalised oil companies in Venezuela.

It was reported in January Mobil Exxon received under 10% of what it was seeking in compensation when its assets were nationalised by the Venezuelan government.