US Markets Down as World Bank Lowers Global Outlook

Edited by Vani Rao

Global growth forecasts trimmed from 3.2% to 2.8% for 2014

The US equity markets finally gave up their positive momentum on Wednesday, June 11, 2014, following the World Bank’s dimmed global economic outlook. The bank trimmed down its global economic growth forecasts to 2.8% for 2014 from its January estimate of 3.2%, keeping in view the after effects of the harsh US weather and geo-political crisis in Ukraine. In addition, the bank also lowered its growth projections for developing countries to 4.8% for the rest of 2014, down from its January estimate of 5.3%.

The Dow Jones Industrial Average pulled back from its four-day string of record-closing highs on Wednesday, and nosedived 102 points, closing the session 0.60% lower at 16,843.88. The World Bank’s lowered economic outlook also had a domino effect on the S&P 500 and NASDAQ Composite Index, which fell 0.35% and 0.14%, respectively, on Wednesday.

As a result, the US markets witnessed a broad selloff, as 9 of the 10 sectors closed in the red. Heavy profit booking was observed in the Utilities, Industrials, and Financials sectors, which lost 1.26%, 0.79%, and 0.68%, respectively. On the other hand, the S&P 500 Energy Index managed to advance, gaining 0.32%.

The US equity markets had started the week on a positive note on Monday, June 9, 2014, as all the three indexes finished higher. However, the equity markets were range bound on Tuesday, and witnessed low trading volumes. During the week so far, the benchmark S&P 500 Index has lost 0.28% and the Dow Jones Industrial Average has fallen 0.48%, while the NASDAQ Composite Index has advanced 0.24%. Information Technology and Energy are the only two sectors to make advances in the previous three trading sessions.

Source: Bloomberg
Source: Bloomberg

Movers

Shrugging off the overall bearish sentiment, a few stocks made headway during the trading session on Wednesday. The shares of the below-mentioned companies finished with robust gains on Wednesday:

  • Shares in Micron Technology Inc. (NASDAQ:MU), an Idaho-based memory chip maker, surged 5.02%, closing the day at $30.99, boosted by an upward rating from equity analysts.
  • Kansas-based H&R Block Inc. (NYSE:HRB), and a provider of taxation-based services, rose 4.62% after better-than-expected Q4 revenue and earnings.
  • Shares in Anadarko Petroleum Corp. (NYSE:APC), an exploration and production company, gained 4.23% to finish the day at $108.32. The company’s stock also recorded a new 52-week high of $109.00.

Shakers

A majority of the stocks triggered heavy losses for the US equity markets during the trading session on Wednesday, June 11, 2014. Shares in the following companies witnessed a broad sell-off:

  • Exelon Corp.’s (NYSE:EXC) shares fell by 3.79% to close at $35.75. The Chicago-based utility services holding company ushered broad losses for the US markets and the S&P 500 Utilities Index.
  • Shares in Delta Air Lines Inc. (NYSE:DAL) shed 2.89%, finishing the session at $40.71.
  • Genworth Financial Inc. (NYSE:GNW), a Richmond-based life insurance and financial services company, reported a decline of 2.84%.

Global Market Snapshot

The impact of modest economic forecasts was observed in global markets as well. A majority of the markets in Europe closed in the red, while the Asian equity markets reported a mixed trend.

Following losses on Wall Street, the FTSE 100 Index finished the session 0.50% lower at 6,838.87 on Wednesday, June, 11, 2014. The FTSE 100 Index was pulled down by losses in Roll-Royce Holdings, which fell by 5.48%.

Source: Bloomberg
Source: Bloomberg

Meanwhile, a mixed sentiment was observed in the Asian markets. Japan’s Nikkei 225 Index rose 0.50% to finish the session at 15,069.48. Meanwhile, China’s Shanghai Composite Index moved up 0.12% to close at 2,054.95.

Source: Bloomberg
Source: Bloomberg

On the other hand, the Hong Kong Hang Seng Index shed 0.25%, closing at 23,257.29, as indicted in the graph below.

Source: Bloomberg
Source: Bloomberg

 

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