Stocks suffered their biggest decline since 9/25. Fears at the onset of Q3 earnings season and concerns regarding the actual implementation of the OMT were cited as reasons for the decline today. Sentiment is still very negative, especially when you consider the strength of the market this year.
Technology stocks continue to trade poorly. Apple was off sharply early in trading and has corrected by more than 10% from its recent high. Apple rallied aggressively from its lows and actually traded in the green before closing down slightly. Several of the big tech winners over the recent several months have been sold off sharply in the past few weeks. The semiconductor space remains a laggard and cannot find a bottom.
Materials outperformed the market today on news from China. The Shanghai composite jumped close to 2% on news that the PBOC will inject more money into their system. The index moved above its 50 day moving average. Increased spending by the Chinese government has a positive impact on material stocks.
There was no real catalyst today to spur buying. There was no concrete news about a plan from Spain and Merkel’s trip to Greece was met with protestors. Until proven otherwise Q3 earnings are going to disappoint. Bulls suggest that earnings expectations are so low that we'll see surprises to the upside. Alcoa, always the first major company to report, announced better than expected earnings after the close today. Q3 earnings season is officially under way. The market will focus on the reports of some major banks prior to the open on Friday.
Financials came under pressure near the end of the day when the Manhattan U.S. Attorney’s office announced they were filing a lawsuit against Wells Fargo concerning FHA mortgages that the government backed. The news came just before the close of trading and details were not clear.
The best performer of the day was the energy sector. Crude rose over 3% today and natural gas climbed 2%. Oil drillers were the best performing industry within the sector.
The S&P 500 finished off 0.99% and the Dow was down 0.81%
Source: PFS Group
