U.S. equities stalled out near major overhead technical resistance levels on Wednesday — including the S&P 500’s post-July downtrend, the 100-day moving average and the 62% Fibonacci retracement — in what was a churning, volatile session. The Dow Jones Industrial Average posted intraday swings worth 700 points.
In the end, the Dow Jones lost 0.3%, the S&P 500 shed 0.6%, the Nasdaq Composite dropped 0.8% and the Russell 2000 ended the day 1.6% lower.
Trading had the hallmarks of professional, institutional selling, as the S&P 500 was reversed no less than four times intraday at its volume-weighted average price.
The risk-off mood could be seen in the surge in the CBOE Volatility Index (VIX), which pushed the iPath S&P 500 VIX Short-Term Futures ETN (NYSEARCA:VXX) to its best one-day gain since Sept. 28. Treasury bonds were also well bid, with the iShares Barclays 20+ Year Treasury Bond (NYSEARCA:TLT) gaining 1%.
Commodities lost ground on strength in the U.S. dollar, with crude oil losing 1.6% to close at $45.20 a barrel to test its 50-day moving average for the first time since the beginning of the month. Gold lost 0.7%.
The focus was on the meltdown in biotech favorite Valeant Pharmaceuticals Intl Inc (NYSE:VRX) on an analyst report alleging the potential criminal use of private pharmacies to boost revenue — the latest blow against an industry already suffering political blowback against prescription costs from presidential contenders in both parties.
The report, by Citron Research, entitled “Could this be the Pharmaceutical Enron?” and says they’ve found a smoking gun to support their allegations and justify a $50 price target. Shares of VRX dropped 28% to close just under $106 a share.
The hyped Ferrari (RACE) IPO was a bit of a flop, dropping more than 8% from its opening price.
In earnings news, American Express Company (NYSE:AXP) reported a miss after the close, earning $1.24 per share vs. the $1.31 analysts were expecting. Revenues were soft as well, coming in at $8.2 billion vs. the $8.31 billion expected. Shares dropped 3.1% in after-hours trading.
But there were some bright spots on the day.
EBay Inc. (NASDAQ:EBAY) reported better-than-expected earnings of 43 cents per share vs. the 41 cents analysts were expecting. Revenues came in ahead of consensus as well, at $2.11 billion vs. $2.10 billion. Shares surged 7.1% after hours. Industrial stalwart United Technologies Corporation (NYSE:UTX) gained 2.6% thanks to better-than-expected earnings on Tuesday.
Further, chip designer Advanced Micro Devices (NASDAQ:AMD) gained 4%, bringing its total gain for Edge subscribers to 8.3%, in the wake of better-than-expected results last week. And General Motors Company (NYSE:GM) gained 5.8% on solid profit margins in North America.
Looking ahead, Thursday will feature results from Caterpillar Inc. (NYSE:CAT), Dow Chemical Co (NYSE:DOW), McDonald’s Corporation (NYSE:MCD), AT&T Inc. (NYSE:T), Microsoft Corporation (NASDAQ:MSFT) and many more.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to Investorplace readers.
