Sam Collins

Stocks Suffer After New Issues

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With few significant earnings to report and the widening of the U.S. trade deficit being the only real economic news, there was little to pressure stocks in either direction Tuesday. But bargain hunters pounced on stocks that they thought were undervalued following Monday's sell-off only to be smacked with a broader front of selling that by the end of the first hour of trading saw the Dow Industrials (DJI) down about 25 points.

Stocks sagged for most of the day with the major story being General Motors' (GM) latest bout with bankruptcy. GM closed at $1.15, the lowest level in years, as GM execs dumped their shares.

The financial sector again took the brunt of the selling with many large banks announcing plans to raise capital through common stock offerings. Bank of New York Mellon (BK) sold $1.2 billion of stock in a secondary offering and the stock fell by 3.79%. And other non-bank companies announced offerings: Ford (F) through common stock, and Microsoft (MSFT) will issue $3.75 billion of senior unsecured notes.

Many defensive stocks rose as cyclicals fell: Consumer staples were up 1.3%, health care climbed 1.4%, telecom was up 1.1%, and utilities closed 0.6% higher. Precious metals gained 1.63% and energy was up with natural gas again higher. NG futures are up almost 28% since May 1.

At the close, the Dow Jones Industrial Average (DJI) was up 50 points at 8,469, the S&P 500 (SPX) fell a point to 908, and the Nasdaq (NASD) lost 15 points to close at 1,716.

The New York Stock Exchange traded 1.6 billion shares with decliners ahead of advancers by 4-to-3, while the Nasdaq traded 799 million shares with decliners ahead by almost 2-to-1.