The U.S. stock market started the week after Thanksgiving on a sour note. The Dow, the NASDAQ, and the S&P are all off about 1% for the session. The selling is widespread, as declining issues are swamping advancers by nearly 4-to-1 on the NYSE. All the large market sectors are trading in negative territory, with much of the weakness concentrated in the healthcare group. Big losers include Parexel (PRXL) and biotech giant Amgen (AMGN). There is also weakness in the consumer sector. Food and beverage makers are getting hit hard, with notable losses in stocks such as Smithfield Foods (SFD) and Coca Cola Enterprises (CCE). The capital goods sector and the basic materials issues are also among the laggards today. Although still in negative territory, the financials and the energy stocks are holding up a bit better than the broad market.
Some stocks making news today include, Starbucks (SBUX), which is in a dispute with Kraft Foods (KFT - Free Kraft Foods Stock Report). Shares of BP (BP) are also trading lower, as the oil giant has agreed to sell some of its assets to finance the cost associated with cleaning up the Gulf of Mexico oil spill.
The market is likely trading lower on fears about Europe’s debt situation. Over the weekend, financial officials on the Continent approved a much-anticipated bailout plan for Ireland. However, investors did not seem happy with the news, and may even be concerned about other countries coming forward to seek assistance. The European stock markets traded lower, with steep losses on the CAC and The FTSE.
The bailout news likely drove the euro lower. This move has also likely led to a stronger U.S. dollar index today. It is important to watch the level of the euro against the dollar, since fears about a falling euro became an area of focus for investors, and fueled the sharp correction that ensued over the summer months.
There were no important economic reports released this morning. However, the initial data suggests that retail sales for the “Black Friday” weekend, showed some improvement over last year’s performance. Elsewhere, President Obama is making an effort to reduce the budget deficit, with measures that include pay freezes for Government employees.
Flight-to-quality behavior has resurfaced a bit today. Demand for U.S. Treasuries has strengthened, driving the yield on the 10-year note to about 2.84%. Although this is higher than it had been in past months, for income investors this is still unattractive relative to many dividend-yielding stocks.