The S&P 500 lost 1.43% and the Dow was off 1.47%. The S&P 500 suffered its sharpest loss since June 20th. Selling was heavy at the open and the market stabilized and essentially went flat after the first hour onslaught.
Trading was not particularly heavy. Selling was consistent with few concerted efforts by buyers to come out and buy bargains. Yields spiked to new cycle highs and put stocks under pressure from the outset. Weak earnings from Wal-Mart and Cisco added fuel to the fire.
Tensions in the Middle East were rumored to be the catalyst for the huge spike in gold. Gold traded near the critical resistance level of 1350 in early trading. As the price neared that level, buying accelerated and intensified as the 1350 level was taken out. The Gold Bugs Index (HUI) reached its highest level in several months as it too took out intermediate-term resistance levels. Gold closed higher by more than 2%. Silver was aggressively purchased all day and closed up better than 5%.
Initial jobless claims dropped to a new low for the expansion. The claims number fell 15,000 to 320,000. The sign that the employment picture is improving gave reason for many to believe tapering is around the corner. The Fed has stated several times that they remain “data dependent” on when tapering will begin. The jobs data today signaled to some that tapering could be happening sooner rather than later.
The NAHB survey for housing increased 3 points to 59 for August. This number was better than expected and helped housing related issues generate relative outperformance on the day.
Technology was weak. Cisco gave poor guidance and announced workforce reductions. The stock was aggressively sold off and was a weight on tech all day. Semi weakness continued and the area sold off better than 2%.
Industrials traded in line with the tape. General Electric traded flat most of the day and gave up just a few pennies at the close. GE held up very well in the tough tape. There was little news regarding stocks in this area and trading was actually quiet in the sector after the flurry of selling at the open.
Weak Wal-Mart earnings on top of weaker than expected earnings from Macy’s earlier in the week put the entire consumer sector under pressure. Consumer staple names did not provide a respite from the selling as all things consumer related were under pressure today.
Source: PFS Group
