S&P 500 Index Down 2.2%; GM, Adobe, Ralph Lauren, Blue Nile Drop

Nichole Harper
09 Nov, 2011
New York City

U.S. indexes opened lower after the euro zone stress overwhelmed bonds and equities markets. Italian yields rose and the euro declined. Adobe Systems dropped 10% after it announced a restructuring. Blue Nile plunged 30% on weak margins and lower earning. Weight Watchers declined 8%.

[R]11:30 AM New York – U.S. indexes opened lower after the euro zone stress overwhelmed bonds and equities markets. Italian yields rose and the euro declined. Adobe Systems dropped 10% after it announced a restructuring. Blue Nile plunged 30% on weak margins and lower earning. Weight Watchers declined 8%.[/R]

U.S. indexes dropped closed to 2% after financials were in focus and debt stress in the Euro zone raised new worries. Yields of Italian and Spanish bonds rose and the yields on the U.S. and German bonds declined.

Market volatility is so high in the last few days that the New York Stock Exchange invoked Rule 48 ahead of market opening.

The exchange has been using the rule all summer to counter the market volatility and asked designated market makers to avoid from disseminating prices before the market opening.

European markets reversed earlier enthusiasm after Italian Prime Minister Silvio Berlusconi offered his conditional resignation. Financial markets in Paris and Frankfurt dropped more than 2% and the benchmark index in Milan plunged more than 4%.

The market sentiment soured after a realization that the Italy’s problems are deeper and current political wrangling is likely to persist several more months.

The euro came under pressure and dropped 1% against the dollar and Swiss franc and the yields on the German bunds declined. Italian bond yields surged above 7%, the level that may blunt the recent reforms impact.

The market stresses were visible the most in the bond market with yields of Spain, Portugal and France rose. German bund and the U.S. Treasury yields rose on the perceived safety of the bonds.

The yield on Italian bonds rose above 7%, the level that forced Greece, Spain and Portugal to seek a bailout. However, a bailout for Italy is not contemplated considering its debt size of €1.9 trillion.

Stock Movers

General Motors ((GM)) dropped 7.9% to $23.06 after the automaker reported quarterly income declined to $1.7 billion and offered a weak outlook for the year.

Ralph Lauren dropped 6.1% to $149.35 after the designer apparel maker reported lower than expected earnings. The designer and retailer reported quarterly earnings

Blue Nile, Inc ((NILE)) plunged 30% to $34.12 after the online diamond and jewellery retailer reported weaker than expected earnings on higher operating cost and lower margins.

Adobe Systems Inc ((ADBE)) dropped 10.06% to $27.36 after the company said it would restructure the business and focus on digital media.