Today's Stock Market News by Zacks Investment Research

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Jun 09, 2011, 12:40 ET

CHICAGO, June 9, 2011 /PRNewswire/ -- Today's stock market news brought to you by Zacks Investment Research. Federal Reserve Chairman Ben Bernanke's comments on the frustratingly slow pace of economic growth continued to dampen investor sentiment. Additionally, the Fed's Beige Book that was released on Wednesday failed to provide any impetus to the stock markets as they registered their sixth consecutive day of losses.

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The Dow Jones Industrial Average (DJIA) dropped 0.2% to close at 12,048.94. The Standard & Poor 500 (S&P 500) continued its slide below the psychological level of 1,300 and shed 0.4% to settle at 1,279.56. The Nasdaq Composite Index inched down by a percent to finish the day at 2,675.38. On the New York Stock Exchange (NYSE), consolidated volumes were 4.1 billion shares and for every three stocks that declined, only one managed to climb up. The CBOE Volatility Index rose above 18. The indices are following a negative trajectory this week and unless benchmarks are able to wash out their losses, the markets are en route to a sixth week of losses.

At the International Monetary Conference in Atlanta on Tuesday, Ben Bernanke acknowledged the slowdown in the economy by saying growth has been "frustratingly slow from the perspective of millions of unemployed and underemployed workers." "U.S. economic growth so far this year looks to have been somewhat slower than expected," he said. Stock markets predictably reacted negatively to these comments and the gloom continued to weigh down the benchmarks on Wednesday. Bernanke referred to the discouraging job scenario and mentioned: "As you know, the jobs situation remains far from normal." "Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established," he said. He also referred to higher prices and said the sluggish outlook for the April-June period was mainly due to the effects of the Japanese natural disaster. However, much to the disappointment of many investors, amidst the indication of such an economic slowdown he did not suggest the possibility of a third round of quantitative easing. Investors continued to be bogged down by Bernanke's speech even a day after and the markets lacked any significant catalysts to resist a fall.

To add to these concerns, the Federal Reserve's Beige book also suggested a slowdown in several regions of the nation for the first time in 2011. It said: "Economic activity generally continued to expand since the last report, though a few Districts indicated some deceleration. Only seven of the 12 federal districts suggested steady gains and districts like New York, Philadelphia, Atlanta, and Chicago reported a slowing pace of growth. Dallas was the only district that reported an accelerated growth."

Stock markets have been dampened by disappointing reports on the job scenario, housing sector and manufacturing growth. The Beige Book's report also failed to provide a complete rosy picture on any of these fronts. It stated: "Most Districts reported gradual improvement in labor market conditions since their last reports. Boston, New York, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, and Dallas all noted general improvement in employment conditions, while job growth was mostly limited to the manufacturing sector in the Cleveland and St. Louis Districts". However, it commented: "Despite signs of continued modest improvement in most labor markets, Minneapolis noted several examples of expected layoffs and St. Louis reported plans for layoffs in the District's services sector".

Talking about the construction segment the Book stated: "Residential construction and real estate continued to show widespread weakness, while rental markets strengthened". "Manufacturing activity was reported as continuing to increase since the last report in all but two districts, although many noted that the pace of growth had slowed," the Book said. As for agriculture it mentioned: "Agriculture conditions were unfavorable in many districts, with various weather related difficulties leading to delays and below-average plantings of key crops".

However, the energy sector limited the losses somewhat after Organization of the Petroleum Exporting Countries (OPEC) members said they would maintain oil output at current levels. This helped crude prices surge above $100 per barrel as light, sweet crude for July delivery was up 1.7% to $100.74 per barrel on the New York Mercantile Exchange. Among the gainers for the sector were Exxon Mobil Corporation (NYSE:XOM), Chevron Corp. (NYSE:CVX) Phillips (NYSE:COP) and Schlumberger Limited (NYSE:SLB) and they were up 1.0%, 0.5%, 0.8% and 1.0%, respectively.

Nonetheless, with crude prices surging, airline stocks were adversely affected as higher oil prices adds to the cost of these companies. Among the decliners were, Alaska Air Group, Inc. (NYSE:ALK), Delta Air Lines Inc. (NYSE:DAL), US Airways Group, Inc. (NYSE:LCC), JetBlue Airways Corporation (NASDAQ:JBLU) and Southwest Airlines Co. (NYSE:LUV) and they dropped 2.2%, 1.3%, 3.5%, 1.5% and 2.3%, respectively.

The financial sector also shared the losses amidst a gloomy economic environment as the Senate voted against an effort to delay a debit card rule. The 'legislative measure' was an attempt to delay the reduction of fees for debit card transactions. However, this will be an advantage for the retailers as it would reduce debit card transaction fees. Stocks like The Goldman Sachs Group, Inc. (NYSE:GS), Morgan Stanley (NYSE:MS), Bank of America Corporation (NYSE:BAC), American Express Company (NYSE:AXP) and Citigroup, Inc. (NYSE:C) declined 1.1%, 1.5%, 1.0%, 1.6% and 2.1%, respectively.

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