The U.S. data on employment that has improved to a great extent is sending positive signals to the Federal Reserve which is mulling a plan to reduce stimulus and this is hurting the market sentiment and investors. Amidst the speculation that from the next week onwards, the Fed may reduce stimulus, U.S. stocks fell and recorded the biggest weekly drop since August.
On the dismal trading day the Standard & Poor’s 500 Index went down from a record high as health-care, telephone and utility companies led the retreat in all 10 of the main S&P 500 (SPX) industries. This all happened as investors shunned companies whose earnings tend to benefit the least from an accelerating economy.
The major loser was McDonald’s Corp. which lost 2.4 percent in November. A major reason behind the fall of McDonald’ Corp. is that its sales missed analysts’ estimates who were expecting better results. On the other hand, Cisco Systems Inc. declined 4.9 percent after reducing its revenue forecast. On positive note, Facebook Inc. jumped 11 percent after the social-media company was picked to join the S&P 500.
The drop continued in the S&P 500 which fell 1.6 percent to 1,775.32 for the week after closing at an all-time high of 1,808.37 on Dec. 9. A similar pattern was seen in the Dow Jones Industrial Average (INDU) which slipped 264.84 points, or 1.7 percent, to 15,755.36. The market observers the two indexes recorded their biggest weekly losses since August this year.
Asian Stocks Mostly Higher
On Friday’s trading in stocks, Japanese and Australian shares moved higher despite the fact that the regional market was not faring well the whole week. Japanese exports got the boost as the yen weakened further. Earlier, on Friday, the dollar set a five-year high against the yen and that was quite a welcoming development for the Japanese economy which depends a lot on exports.
Apart from Japan, Australia was on the positive track as its S&P/ASX 200 gained 0.7% on Friday’s trading and closed at 5098.40. However, South Korea’s Kospi could not maintain the trend and extended its losses, trading down 0.3% at 1962.91.
Similarly, Hong Kong’s Hang Seng Index crept up 0.1% to 23245.96. The major gainer in
Chinese stock trading was China Cinda Asset Management Co., which rose 4.4%. The major concern among investors is the Chinese banks are mulling a plan to liberalize the interest rates.
To contact the reporter of this story: Jonathan Millet at email@example.com