Dow Negative for 2015 As Stocks’ Slide Deepens

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Stocks continued their recent slide on Monday as investors expressed disappointment with the Apple (AAPL) Worldwide Developers Conference, which honestly was a little underwhelming.

AAPL stock appleThe big focus was upgrades to the Siri voice assistance interface that merely brings Apple’s offering up to what Google (GOOG, GOOGL) Now and Microsoft’s (MSFT) Cortana are already doing. The Apple Music streaming service was also unveiled, but also felt like catch-up from the folks in Cupertino.

There’s been some bond market and currency market activity as well — after President Barack Obama reportedly talked the dollar down at the G7 meeting — but it’s been fairly mild compared to what we saw last week.

In the end, the Dow Jones Industrial Average lost 0.5% to bring its year-to-date performance into the red, the S&P 500 and the Russell 2000 lost 0.6%, and the Nasdaq Composite lost 0.9%,

Crude oil lost 1.4% to close at $58.31 a barrel. That pushed the ProShares UltraShort Crude Oil (SCO) recommended to Edge subscribers to a gain of nearly 10% for the month so far.

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Airline stocks were hit hard after the CEO of American Airlines (AAL) made comments to Reuters about capacity growth risks weighing on profits. JetBlue (JBLU) — a momentum trader favorite — was slammed 7.2% to push the June puts that I recommended to Edge Pro subscribers to a gain of 33%.

Tech stocks led the way down at the sector level, thanks to AAPL’s contribution, losing 1.2% as a group. Defensive telecom and consumer staples stocks were the day’s highlights, with the former gaining 0.2%.

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Technically, the selloff is getting somewhat serious now as the CBOE Volatility Index — Wall Street’s “fear gauge” — breaks up and out of a downtrend pattern going back to December as traders move into put option protection against additional losses.

Market breadth, or the percentage of stocks in uptrends, is also breaking down in a significant way.

After Friday’s strong payroll report, the market seems to be coming to the realization that the Federal Reserve will likely hike interest rates in September for the first time since 2006 — putting an end to the long experiment with 0% interest rates. A Reuters poll shows that 14 of 16 Wall Street firms expect a September liftoff; while 13 of 16 expect two rate hikes by the end of the year.

With Societe Generale economists looking for the labor market to return to full employment by December, the policy doves at the Fed are running out of excuses to maintain interest rates at financial crisis levels. After years of growing dependence on the Fed’s monetary morphine, stocks are understandably feeling nervous about all this.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/dow-jones-negative-for-2015-as-stocks-slide-deepens-federal-reserve/.

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