After The Close - The stock market opened sharply lower this morning, and was not able to reverse itself in any meaningful way. Notably, the bargain hunters, so ready to buy the dip in the past, seemed to be sitting on the sidelines today. At the close of the day, the Dow Jones Industrial Average was off 138 points (-0.9%); the S&P 500 Index was lower by 23 points (-1.4%); and the tech-laden NASDAQ, which was severely bruised, surrendered 60 points (-1.8%). Market breadth confirmed a negative tone to the session, as declining stocks outnumbered advancers by better than 3 to 1 on the NYSE, and by about 4 to 1 on the NASDAQ. There were about 135 stocks hitting new highs, versus 327 at new lows on the NYSE, which is a clearly different reading than was present a few weeks ago.
The major market sectors all moved lower, confirming broad-based selling. The basic materials issues, which had been a strong sector earlier in the bull market, led the way lower again today. The technology issues were also weak. Notably, the Semiconductor Index (SOX) lost about 3.5%, as Cirrus Logic (CRUS) tumbled dramatically. The energy issues also saw steep declines. Meanwhile, losses in the defensive healthcare and utility names were less severe than other sectors.
Technically, the S&P 500 has been volatile, ever since breaking into new high ground near the 1,600 mark. Today’s move lower brought the Index to its 50-day moving average at 1,542, where it found some support. Whether or not this will continue to be the case remains to be seen. Notably this level has held during market pullbacks in mid-March and early April. The VIX was up about 18%, to just over 16 today, as traders became more apprehensive.
The economic news released this morning was minimal. The Fed’s Beige Book summation for April came out at 2:00 PM (EDT), but did little to change the market’s direction. Tomorrow, we get a look at the weekly initial and continuing jobless claims, the Philadelphia Fed’s report on economic activity in that region, and the Conference Board’s leading economic indicators.
In corporate news, shares of Dow-component Bank of America (BAC - Free Bank of America Stock Report) were off sharply, after the banking giant put out profits that were below analyst expectations. Also in the Dow, Intel (INTC - Free Intel Stock Report) stock was essentially flat, even though the company’s revenues results generally topped expectations. - Adam Rosner
At the time of this article’s writing the author did not have positions in any of the companies mentioned.
12:10 PM EDT - The rollercoaster ride for both long equities and commodities continues on Wall Street. Monday’s outsized losses gave way to a nice recovery during yesterday’s session, but as we pass the midday hour on the East Coast today the bears are back in a big way once again. This time, they are emboldened by a batch of disappointing earnings reports from Corporate America and renewed concerns about the economic and financial health of the euro zone. Monday’s rout was more the product of disquieting U.S. economic news. Thus, as we reach the noon hour, the Dow Jones Industrial Average, the broader S&P 500 Index, and the tech-heavy NASDAQ are well into negative territory. The broadbased selling is reflected in the large negative disparity between declining and advancing issues on both the New York Stock Exchange and the NASDAQ, to the tune of about four-to-one and six-to-one on the respective exchanges.
Each of the 10 major sector groups are toiling in the red thus far today, with one of the biggest laggards being the technology group, which so happens to carry the largest market weighting. Pressuring technology stocks today are a number of items, most notably a sharp drop in the share price of technology behemoth Apple (AAPL). Apple shares hit a new 52-week earlier today and in the process broke through a significant technical support level, suggesting that the stock could fall further, especially if the technology giant reports sluggish quarterly results next Tuesday and also does not announce that it is returning incremental cash to its shareholders. Behind part of Apple’s selloff today was a weak quarterly report from Cirrus Logic (CRUS), one of its main suppliers. Also hurting technology issues were lackluster results from Dow-30 component Intel (INTC – Free Intel Stock Report) and Internet company Yahoo! (YHOO).
The technology sector has had some companionship in the red. Energy, industrial, and financial stocks are also off sharply. The energy issues are being pressured by retreating crude oil prices (which are on pace for the sixth consecutive daily decline) and renewed concerns about the global economy. The latter issue is also weighing on the industrial names. The financial stocks sold off on the economic concerns and a disappointing report from Dow-30 member Bank of America (BAC – Free BofA Stock Report). The banking giant reported a lower-than-expected first-quarter profit and saw its revenues fall.
Elsewhere, the news from overseas was not uplifting either. Before the market opened on our shores, international stocks were down on economic concerns about the euro zone and speculation that Germany and France may see their sovereign-debt ratings cut. The euro is down versus the dollar thus far today and as trading nears its conclusion on the Continent, the major European bourses, including Germany’s DAX and France’s CAC-40, are more than 2% lower for the session.
Turning back to the homeland, investors, still smarting from the weak earnings news, will be greeted by the Federal Reserve’s latest Beige Book summation of economic conditions at 2:00 P.M. (EDT). That report may be given extra attention this afternoon, given, the current volatility on Wall Street and the dimming outlook for the economy on the global scale. Aside from initial weekly unemployment claims tomorrow morning, it is the last major piece of economic news due out this week. Thus, our expectation is that the investment community’s attention will quickly return to the earnings front. As we have noted often here in recent weeks, the market was clearly overextended and any disappointing data on the economy or earnings front could trigger a selloff, which clearly seems to be the case this week. Stay tuned. - William G. Ferguson
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
10:30 AM EDT - The bears are back--at least so far this morning. Indeed, following Monday's 266-point rout in the Dow Jones Industrial Average and the generally faltering tone of that day's entire market, and after yesterday's nice bounce-back rally, in which the Dow regained 158 points, the sellers are back. And in a big way.
Specifically, after just about an hour into the trading session, the Dow is off by 127 points; the Standard and Poor's 500 Index is lower by 19 points; and the NASDAQ is in the red by 52 points. Losing issues are well ahead of gaining stocks in an all-inclusive selling squall for the second time in three days this week.
Behind today's selloff are concerns about softening economies across the euro zone and in China, falling commodity prices, including gold and oil, and some individual company concerns about earnings.
All of this is coming against a quiet economic setting so far this morning. However, that sparse news backdrop will be broken this afternoon when the Federal Reserve is scheduled to release its Beige Book economic summation, a closely watched survey that could get special attention today given the continuing volatility on Wall Street and the dimming outlook for the economy on a global scale. - Harvey S. Katz
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Stocks to Watch from The Survey – Today is another busy day on the earnings calendar for bellwether companies. After the market closed yesterday, chipmaker Intel (INTC – Free Intel Stock Report) released first-quarter financials that were generally in line with investors’ expectations. Although its outlook was not as bad as some had feared, the stock is trading slightly lower in the premarket. Another member of the Dow 30, Bank of America (BAC – Free Bank of America Stock Report), also left investors wanting more after its earnings fell a bit short of the consensus estimate. The equity is indicating a modestly lower opening as a result. Other notable stocks trading lower ahead of the bell on earnings news include internet company Yahoo! (YHOO), railroad operator CSX Corp. (CSX), financial services companies Bank of New York Mellon (BK) and Piper Jaffray (PJC), equipment leasing company United Rentals (URI), diagnostic testing provider Quest (DGX), drugmaker Abbott Labs (ABT), and diversified manufacturer Textron (TXT), which is best known for its Cessna airplanes and Bell helicopters.
One of the few bright spots is Mattel (MAT) stock, which is trading higher in the premarket after the toymaker released solid March-period results, thanks to strength in its American Girl line. – Matthew E. Spencer
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The stock market rebounded yesterday from its drubbing the day before, as optimism about the U.S. economy returned a day after the Dow Jones Industrial Average had suffered its biggest one-day loss in five months.
Of note, it had been pessimism about both the global and the domestic economic situation that led the bears to reassert themselves on Monday. However, in the latest session, a good report on the housing market, somewhat better metrics on industrial production and factory utilization, and a benign survey on consumer price inflation all helped to put the bulls back in charge.
Thus, one day after the Dow had plunged by 266 points, that same 30-stock composite of blue-chip companies turned notably higher, gaining 158 points, or 1.1%. Not to be outdone, the NASDAQ leaped by 48 points, or 1.5%. Winning issues swamped losing stocks on both the Big Board and the NASDAQ.
Meanwhile, also helping sentiment was a series of generally buoyant earnings reports including a pair from blue chips Coca-Cola (KO – Free Coca-Cola Stock Report) and Johnson & Johnson (JNJ – Free J&J Stock Report). Both equities gained on the session. All told, of the relatively few companies in the S&P 500, which have reported results so far, two-thirds have beaten forecasts, an average-to-slightly better showing relative to the past several years. Also rallying yesterday was gold, with the precious metal gaining modestly following a major downturn the prior day. Oil, too, drifted higher.
And the earnings beat has again heated up today, with reports already issued from chipmaker Intel (INTC – Free Intel Stock Report), which posted somewhat weaker earnings, but gave a reasonably upbeat outlook. That stock, though, is indicated to open the day's trading narrowly to the downside. An even bigger setback seems ahead for banking behemoth and fellow Dow component Bank of America (BAC – Free BofA Stock Report), which posted lower-than-expected revenues. That issue is showing about a 3% decline in the pre-market this morning.
As for other news, we will get the Federal Reserve's summary of economic conditions, known as the Beige Book, this afternoon. That report can, at times, be a market mover. Elsewhere, the earlier bearishness seems to be back, as equities in Europe are selling off today, on concerns about growth prospects on the Continent, where recessions are spread across most of the nations in the euro zone.
The weak showing overseas and the dour report from Bank of America, meantime, are combining to push our equity futures notably lower in the pre-market. All told, with less than an hour to go before the start of the new trading day, the S&P futures are lower by 12 points and the NASDAQ futures are in the red to the tune of almost 22 points, suggesting that we could be headed for another deep selloff this morning. Not surprisingly, commodities also are pressing lower, suggesting the recently battered basic materials stocks could be in for some additional outsized selling. Stay tuned. – Harvey S. Katz
At the time of this article's writing, the author had positions in INTC.