American market overview

Major indices closed the week by decrease, review of the USA market

On Friday stocks fell down and closed the week of their growth. S&P 500 index declined for 2%, NYSE marked 2.1% decrease, NASDAQ was cut to 1.8% and Dow industry index – for 1.7%. Small-cap companies experienced a heavier decline; S&P 600 index lost 3.2%. NYSE volume grew for 25% and at the same time NASDAQ volume increased for 7% in comparison with Thursday level, on the date when options expire. On March 16 S&P 500 and NASDAQ had a more serious loss. Two days of heavy decline within such a short time is not a good sign. One more reason for trouble is that days of distribution came very soon after the signal for market decline was received on March 12.

These two days of distribution conduced to a negative mood in spite of general growth of the market within the week. Besides, by the date of closure NASDAQ fell down to the average 50-days level. Dow increased for 0.8 % within the week, S&P 500 - for 1.6 %, NASDAQ +1.8 %, +2.4 % NYSE. S&P 600 lost 1.5 %. As it was mentioned before, to a serious extent the market was supported by financial stock’s recovery and in a lesser degree – by growth of technological stocks and other sectors. On Friday drop of these stocks decreased the value of major indices. The same day one of the leaders of recent financial growth - the Bank of America Corporation (BAC) – dropped to 11 %. Branch of the American International Group filed a lawsuit against subsidiary of the BAC - Countrywide Financial – which undertook loan modifications.

Stocks of other major banks also fell down. Techs stocks dropped as well; negative forecast from Sony Ericsson impacted the sector. Cell phone manufacturer reported they expect losses in the first quarter because of falling consumer demand. Ericsson (ERIC) declined for 11 %.

Stocks of power, transport and machinery industries decreased as well. IBD 100 index declined. Leading stocks of IBD index lost 1.2 % and had not increased during the week. Some shares with the highest rank conduced to positive expectations. A few stocks were able to sustain an upward trend.

Starent Networks (STAR) stocks dropped for 1.03 % by 16.25. CL King Shares decreased sharply after a period of sustainable growth. NVE Corp. (NVEC) fell down to 31.14 for 2.59 %. Stocks of sensor devices manufacturer Spintronic lost 21 % from their maximum value achieved within 52 weeks.

Meanwhile, Federal Reserve Chairman Ben Bernanke announced on the bank conference that in future paying bank compensation packages will be under the focus of particular attention. According to him, this policy “can create perverse incentives” which damage banks. His notes came after the discussion about bonuses paid to officers of American AIG.

Author is analyst of Broco