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Falling Sectors Outnumbered Advancers and Dragged SPY Down

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SPY fell 0.78%

The SPDR S&P 500 ETF (SPY) and the Direxion Daily S&P500 Bull 3X ETF (SPXL) ended low, with falls of 0.78% and 1.9%, respectively, on Wednesday, December 9. The graph below presents the percentage changes in the component sectors of the SPDR S&P 500 ETF (SPY) as of December 9. We can see that falling sectors outnumbered advancing ones.

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Material sector soared high

The material sector represented by the Materials Select Sector SPDR ETF (XLB) soared 3.0% on Wednesday, December 9, 2015, amid concerns of a global economic slowdown. Material stocks surged on the day as the chemical companies Dow Chemical (DOW) and Du Pont (DD) were said to be in talks for combining their respective businesses.

As a result, the stocks of many companies into chemical manufacture, namely FMC (FMC), Mosaic (MOS), Eastman Chemical (EMN), CF Industries Holdings (CF), and LyondellBasell (LYB) rose 1.2%, 2.7%, 2.9%, 2.5%, and 1.7%, respectively, on December 9.

On the other hand, stocks of mining companies like Newmont Mining (NEM), Freeport-McMoRan (FCX), Nucor (NUE), Alcoa (AA), and Allegheny Technologies (ATI) gained 1.3%, 3.7%, 1.4%, 2.6%, and 3.2%, respectively, on the day. FCX gained 3.7% after the company announced financial measures like suspending dividend distribution, cutting capital spending on oil and gas, as well as bringing down copper production amid falling commodity prices.

Finance sector is a big drag on SPY

The financial services and the financial sectors were the biggest drag on SPY. The finance stocks yielded negative returns ahead of the Federal Reserve’s December meeting. The probability of a hike in short-term interest rates is high. However, US investors seem cautious about the timing of the rate hike. The macroeconomic factors like China’s economic slowdown impacting commodities, not to mention the oil supply glut, created concern among investors. Hence, stocks of Intercontinental Exchange (ICE), CME Group (CME), State Street (STT), Genworth Financial (GNW), and Charles Schwab (SCHW) yielded -3.4%, -3.8%, -3.0%, -4.8%, and -2.6%, respectively, on December 9.

Now, let’s analyze the stock price movement of Dow Chemical (DOW) and Du Pont (DD) in detail.

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