Stocks were pounded to their lowest prices in a month with the Dow industrials leading the way, off 0.9%. The index has fallen 0.6% since the end of last week.
Greece’s decision to delay an International Monetary Fund (IMF) payment and “bundle” several payments later this month had a negative impact on the market.
All 10 sectors of the S&P 500 registered a loss, but the worst-performing sectors were materials and energy.
Stocks fell despite a request from the IMF to the Federal Reserve not to raise interest rates until 2016. There has thus far been no response by the Fed, but it did say that the U.S. recovery was progressing at a slower-than-expected rate.
Today’s employment report is expected to show an increase of 227,000 jobs in May. Anything much higher than that could signal a rate increase later this year. However, a lower jobs number may cause the Fed to consider the IMF’s request to delay the increase.
Initial jobless claims declined to 276,000 for the week ended May 30 from an upwardly revised 284,000 the prior week. This was slightly above estimates.
DISH Network Corp (NASDAQ:DISH) and T-Mobile US Inc (NYSE:TMUS) gained on merger talks with DISH up 4.9% and TMUS up 2.7%.
Crude oil fell 2.8% to $57.98 a barrel. Gold fell to a five-week low, closing down 0.8% at $1,175.20 an ounce.
The U.S. dollar rose against the euro. And the yield on the benchmark 10-year Treasury note dropped to 2.31% from 2.37% on Wednesday as bond prices rose.
At Thursday’s close, the Dow Jones Industrial Average fell 171 points to 17,906, the S&P 500 was off 18 points at 2,096, the Nasdaq lost 40 points at 5,059, and the Russell 2000 dropped 13 points to 1,251.
The NYSE traded total volume of 3.2 billion shares and the Nasdaq crossed 1.8 billion. On the Big Board, decliners outpaced advancers by 3.4-to-1, and on the Nasdaq, decliners led by 2.6-to-1.
The SPDR S&P 500 ETF Trust (NYSEARCA:SPY) almost broke its 50-day moving average on Thursday, but a last-minute (literally) rally avoided a breakdown in the S&P 500 and SPY.
The chart formation, a flag, is short-term bullish, but the MACD indicator is on a sell, so we will have to wait this out for a more-defined trading signal. With a support line at the twin January highs of $206, a break of the 50-day moving average near $210 would probably be shallow.
Wednesday’s high of 2.39% in the yield of the 10-year Treasury note is significant since it indicates a breakdown in bond prices. This is a seven-month high and cleanly broke through resistance at the December high and 200-day moving average.
Conclusion
The break in the 10-year bond yield’s resistance at the December high underscores this week’s recommendation to get out of all but the most secure equity-related high-yield investments. What group should benefit from higher rates? Banks, and I will be making recommendations in that sector next week.
I’ve been plumbing the transports this week in an attempt to highlight several stocks of uncommon value. Bottom-fishing has its risks, but I believe patient investors could be sufficiently rewarded owning the three stocks recommended this week: J B Hunt Transport Services Inc (NASDAQ:JBHT) (see Trade of the Day), Delta Air Lines, Inc. (NYSE:DAL) (see Trade of the Day) and Union Pacific Corporation (NYSE:UNP) (see Trade of the Day).
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
