Sellers came in at the open and kept the pressure on until the market closed. The S&P 500 suffered its worst one day decline since June 21st. Futures took a big hit prior to the open on bad news from Europe. Lower EU growth forecasts and a downbeat speech from Draghi prior to the open set an ominous tone for the market. New growth forecasts for the European Union were below prior expectations. The news regarding the outlook for Spain caused the most concern. The EU now forecasts Spain exceeding prior deficit targets. The ECB President did raise concerns over slowing growth in Germany.
The market spiked higher yesterday as Americans went to the polls. Today concerns over the issues that need to be dealt with prior to yearend led to a pullback that erased this week’s gains. There had been hopes that investors would move aggressively into the market to play catch up. Today the feeling was that people were selling to lock in the gains they had made so far in the year. So much for long-term planning.
Some areas that have been strong performers for the year and even stronger in the past week were sold off aggressively today. Financials were up strongly yesterday on the thought that legislation going forward would not be as restrictive as the measures taken over the past few years. That was not true today as financials were laggards.
Treasuries rallied across the yield spectrum as the risk-off trade held sway. Commodities were leaders today. Precious metals, copper, grains and natural gas traded ahead of the broad market. Crude sold off sharply today, down 4.5%.
The consumer sector outperformed the broader market today. Retail was down less than the market. Data on consumer credit released during trading was positive and the outlook for many retailers entering the holiday selling season remains strong.
Source: PFS Group
