Tuesday’s Market Recap: Stocks Give Up Gains

After a strong day yesterday the markets were down today (Tuesday). The Dow (^DJI) closed at 7660.29 and the NASDAQ (^IXIC) lost -37.78 to close at 1517.99. The S&P (^GSPC) was down -2.02% and closed at 806.30. The 10 year closed with a yield of 2.706% as prices fell today. May crude oil finished the day at $53.98 while April gold contracts settled at $923.80.

The NASDAQ’s decline today was led by tech giants Microsoft (MSFT) and Intel (INTC). Speculation about the bottoming out of technology and more specifically the semiconductor sector led the downward trend for technology. Many believe that the semiconductor sector will lead the tech rebound and that it will happen in the second half of 2009. The technology sector is down -9% year to date.  The once held belief that technology could withstand a recession has been shattered.  Bellwether companies like Microsoft and Intel have been hurt severely and are well below their 52 week highs.  Hopefully these companies will recover and lead the tech sector and the economy out of this downturn.

Other stocks down today were airline companies, specifically US Airways (LCC) and Southwest Airlines (LUV). The market responded to news reported by the International Air Transport Association, which stated that the airline companies around the world will lose a combined -$4.7 billion.   The revenue loss will be -12% which is almost three times the amount of revenue loss following the attacks on September 11th.  Airline travel has fallen greatly due to the economic downturn, even more than originally anticipated.   The only bright news for airlines is that fuel prices are falling, but this does not help the companies because demand destruction completely outweighs this slight benefit.

Also down today was AIG (AIG), partly in response to Treasury Secretary Timothy Geithner’s comments about the company. Geithner said that he is just as frustrated as the American people over the failures of the insurance company. Geithner is also scheduled to meet with the Federal Reserve to discuss laws and regulation that would have helped to prevent the failure of AIG and the use of taxpayer money to bail them out. We will have to see if Geithner’s plan will save the financial industry. Financials gave back much of what they gained yesterday and are were down again during the trading day.  It seems as though that the financial sector in particular needs good news everyday to reassure buyers to enter the market and buy their stock.

Disclosure: None.

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