The Dow Jones Industrial Average (DJI) lost almost 0.5% to close at 18,203.37. The Standard & Poor’s 500 (S&P 500) dropped 0.5% to 2,107.78. The tech-laden Nasdaq Composite Index closed at 4,979.90; diving 0.6%. The fear-gauge CBOE Volatility Index (VIX) increased 6.3% to settle at 13.86. The composite volume on the New York Stock Exchange was 3.2 billion, lower than the average yearly volume of 3.69 billion. The advance decline ratio on the New York Stock Exchange was 2:3.
Markets’ decline yesterday pulled VIX up from its lowest level it had hit this year on Monday. Nonetheless, the fear-gauge index is down 27.8% year to date. Also, VIX has shaved more than 30% over the last month when benchmarks moved higher to post their biggest monthly percentage gains in more than two years. The fear-gauge index has an inverse relationship with the markets.
Tuesday’s decline was largely triggered by a lower-than-expected vehicle sales report. Though six of the seven top auto manufacturers reported year-to-year sales increases in February, they were all behind market expectations. Extreme winter weather was blamed for the slower-than-expected sales numbers. Some also blamed the rise in oil prices late last month to have affected sales.
Total US sales increased 5.3% in February to 1,257,619 vehicles, according to Autodata. This was short of expectations of a 7.1% increase. Meanwhile, industry annualized sales rate was 16.23 million vehicles in February, well short of the 16.7 million estimates.
General Motors Company (GM), Fiat Chrysler Automobiles N.V. (FCAU), Nissan Motor Co. Ltd. (NSANY) and Honda Motor Co., Ltd. (HMC) all managed modest year-on-year February sales gains. However, all of their sales were lower than expectations. Ford Motor Co. (F) however witnessed a 2% drop in sales. Meanwhile, Toyota Motor Corporation (TM) outperformed Ford and snatched the number 2 position. While shares of General Motors and Honda edged up 0.5% and 0.1%, Fiat, Nissan, Ford and Toyota lost 3.3%, 0.9%, 2.4% and 0.4%, respectively.
Separately, Benjamin Netanyahu’s warning over the attempts of White House-Iran’s nuclear deal affected sentiment, causing fears of risks in the Middle East. Netanyahu said: “If the deal now being negotiated is accepted by Iran, that deal will not prevent Iran from developing nuclear weapons—it will all but guarantee that Iran will get those nuclear weapons—lots of them.” He warned the Congress against accepting the deal, which he said is a “countdown to a potential nuclear nightmare'' by a country which “will always be an enemy of America.”
Criticizing the deal, Netanyahu said: “This deal won't be a farewell to arms, it will be a farewell to arms control ... a countdown to a potential nuclear nightmare”. However, his speech was boycotted by a number of Obama's fellow Democrats. Later Obama commented that Netanyahu’s speech had no “viable alternatives” to offer to the nuclear negotiations and “there was nothing new” in the speech.
However, the speech along with Libya’s continued air strikes on oil terminals pushed oil prices higher. WTI Crude Oil and Brent Crude Oil increased 1.8% and 2.4% to $50.52 and $61.02 a barrel. This in turn also led energy stocks higher and Energy Select Sector SPDR (XLE) was among the only two gainers out of the 10 S&P industry groups. Energy sector advanced 0.4% and Utilities Select Sector SPDR ETF (XLU) gained 0.6%.
Key energy stocks including Schlumberger Limited (SLB), Kinder Morgan, Inc. (KMI), EOG Resources, Inc. (EOG), ConocoPhillips (COP) and Occidental Petroleum Corporation (OXY) gained 0.3%, 0.6%, 1.5%, 0.6% and 0.4%, respectively. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GENERAL MOTORS (GM): Free Stock Analysis Report FIAT CHRYSLER (FCAU): Free Stock Analysis Report NISSAN ADR (NSANY): Get Free Report HONDA MOTOR (HMC): Free Stock Analysis Report FORD MOTOR CO (F): Free Stock Analysis Report TOYOTA MOTOR CP (TM): Free Stock Analysis Report SCHLUMBERGER LT (SLB): Free Stock Analysis Report KINDER MORGAN (KMI): Free Stock Analysis Report EOG RES INC (EOG): Free Stock Analysis Report CONOCOPHILLIPS (COP): Free Stock Analysis Report OCCIDENTAL PET (OXY): Free Stock Analysis Report To read this article on Zacks.com click here.
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