The S&P 500 declined by 1.21% and the Dow was lower by 0.94%. Weakness in foreign markets overnight set a negative tone for our markets. The Chinese Shanghai Composite declined by 5.3% over concerns regarding slower growth and liquidity issues. There are concerns that the Chinese central bank is decreasing its support for the market to reduce speculative excesses.
There was continued selling in our Treasury market. The 10-year note fell more than a point and its yield increased to 2.66%. There were concerns that central banks would reduce bond buying activities.
Traders began selling stocks at the open today. The S&P 500 was off more than 2% at one point in the morning session. The Dow rallied more than 200 points intraday and the S&P 500 reduced its losses to single digits at one point. The rally proved short lived and the markets sold off in the final hour of trading with the S&P posting a loss of over 1%.
Fears of slowing growth in China and rising interest rates put all sectors under pressure. With the end of the quarter near there was little in the way of company specific news. There will be little in the way of earnings releases for the next few weeks. Also, there were very few economic data points to spur the market higher. Financials, materials, energy, and industrials were all of between 1.4% and 1.7%.
Fears of slowing growth hurt the materials, energy, and industrial names. Financials will actually see there earnings soar in a steepening yield curve environment. However, fears of a slowing mortgage market due to higher rates were more important today.
Tomorrow we will see more economic data to impact trading. April Case-Shiller Home Price data will be released, May durable goods, May home sales, and June consumer confidence data will be released.
Source: PFS Group
