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US: losing streak continues

Zareena Sayeedova, Leading Analyst, Global Markets (Finam)

On Tuesday, April 10, US equity benchmarks finished the session with sizeable losses on expectations the corporate earnings season will kick off. In other words, the indexes headed south for the fifth session in a row. After the final bell aluminum giant Alcoa kicked off the corporate earnings season and expectations about its financial showings were not the most favorable, as are for the earnings season as a whole. No robust numbers were expected from Alcoa, but in fact the aluminum mammoth’s Q1 financials proved to be fairly strong.

Investors shrugged off economic data released: February wholesale sales rose 1.2%, far above expectations, while the IBD/TIPP Economic Optimism Index grew from 47.5 to 49.3.

The external news flow was unfavorable and this intensified bearish sentiment on American exchanges, there is again talk about rising borrowing costs for Spain and Italy. The yield on 10-year Spanish bonds narrowed 6%, the highest quarterly level, and that on Italian bonds increased to nearly 5.7%. As defensive sentiment intensified investors rushed to pick up treasuries, which caused the yield on 10-year paper to fall below 2%.

In the indexes, the Dow Jones Industrial Average lost 1.65% to finish at 12,715.93, the Standard & Poor's 500 Index shed 1.71% to 1,358.59 and the technology-heavy Nasdaq Composite pulled back 1.83% to end the session at 2,991.22.

In commodities, NYMEX light, sweet crude for May delivery dropped 1.4% to USD 101.02/bbl, while COMEX gold for April delivery grew 1% to USD 1,659.50/oz. In FX trading, the dollar rose against the euro and the pound, but dropped versus the yen.

In the blue-chip universe, only HP shares landed higher, while the likes of Alcoa, AIG, Boeing, Citigroup, GE, International Paper and Walt Disney pulled back over 2%.

Electronics retailer Best Buy dove 5.9% on news the company’s СЕО Brian Dunn will step down to give his seat to a board member. The company said "there was mutual agreement" that it is time for new leadership.

Shares of supermarket and pharmacy chain Supervalu rallied 15% on FY13 profit guidance that outstripped the Street’s forecasts.

Shares of biopharm Halozyme Therapeutics dove 13% after being downgraded from Buy to Hold at Jefferies Group.

Another pharmaceutical company ViroPharma crashed 22% on news its rival Akorn launched supplies of a generic drug similar to ViroPharma’s product, depriving the company of a considerable portion of earnings.