The S&P has seen the worst drop seen in 2012. This is largely due to a reduced consumer confidence, China’s reduced growth forecast, the continuing worries over the euro-zone debt crisis, and the cost of insuring against Spanish debt default.
Banks hit by euro-zone worries
Financial industries dropped the most out of the 10 industries on the S&P 500 index. This was due to continuing worries over Europe and its debt crisis. JP Morgan Chase & Co and Bank of America Corp. both dropped by at least 3.6 percent. The technology sector also saw its first weekly slump of the year, largely in part due to Google’s new share plan that will ensure control is kept in the founders’ hands.
The S&P fell by 1.3 percent at 4 pm on Friday, bringing the weekly decline to 2 percent. The Dow fell by 1.1 percent to 12,849.59 points.more than 6 billion shares were traded on Friday; this is 9 percent below the 3 month average.
“Let’s not get overly concerned, but yes, there are concerns out there that we need to look at,” Brad Sorensen, director of market and sector analysis at Charles Schwab Corp., which has $1.81 trillion in client assets, said “China has been disappointing, U.S. consumer confidence adds to the pressure and Europe is not out of the woods yet.”
Stocks began to waver in April as consumer confidence began to drop from a one-year high. China’s growth slowed to the least in the past 3 years and credit default swaps soared in value as Prime Minister Mariano Rajoy is struggling to prevent Spain from becoming the next European Union member to need bailout.
Citigroup Inc. (C), Goldman Sachs Group Inc. (GS), Bank of America, Microsoft Corp. (MSFT), and Yum! Brands Inc. (YUM) will all be releasing quarterly earnings reports during the following week. This could very well give investors the confidence they need for a rally or be the catalyst for much worse things to come. All depends on the earnings of these major players.
Google released encouraging an earnings report, but still saw a decline of 4.1 percent to $605.03, largely due to the share split planned.