The S&P 500 traded off by 0.31% and the Dow was 0.38% lower. The S&P 500 carried losses throughout most of the trading day and again rallied into the close. There appeared to be no reason for the late rally except that it appears that the pain trade remains higher.
Most major groups finished the day lower. Financials, technology, industrials and materials all closed lower by between 0.20 and 0.30%. There was little news to drive any of these sectors and there was simply some profit taking in the wake of last week’s rally.
Healthcare was higher today on news from the J.P. Morgan healthcare conference. Some biotechnology companies made presentations that were favorably received by the attendant analysts. Large cap pharmaceuticals were quiet today but slightly ahead of the overall market.
The homebuilding/building products sector was mixed today. Home supplies company Lowes was off today on an analyst downgrade after a very strong run higher. Several homebuilders again traded higher. Lennar was higher by 2.5% as the homebuilder adds to last year’s strength.
Bank of America announced a settlement with Fannie Mae to resolve agency mortgage repurchase claims on loans originated and sold directly to Fannie Mae through December 3, 2008. They also announced that they agreed to sell the servicing rights on certain residential mortgages. Based on all the disclosures BAC’s implied earnings guidance appears higher than expectations.
Transports finished lower after breaking out last week. Rails were lower today after severely outperforming last week. Many railroad stocks flirted with multi-year highs last week. Truckers and parcels also traded lower on the day.
Energy was one of the weakest areas of the market today. Oil services, drillers and integrated oil names were all lower. The major integrated names Exxon and Chevron traded lower all day.
Fourth quarter earnings season begins in earnest tomorrow with Alcoa and Monsanto being the biggest names to report Tuesday.
Source: PFS Group
