Stocks fell Tuesday, but losses were muted by expectations of more accommodation when the Federal Reserve releases the minutes of its October FOMC meeting this afternoon.
The Nasdaq lost 0.1%, the Dow Jones Industrial Average fell 0.2%, and the S&P 500 dropped 0.3%.
Crude oil fell sharply again, down 1.8% to $43.20 a barrel. Weekly inventories, set to be released by the U.S. Energy Administration today, are expected to show another increase in stockpiles. Energy stocks fell 1.2% on the day.
Despite lower energy costs, the Dow Jones Transportation Average lost 2.6%. JetBlue Airways Corporation (JBLU) led the transports lower, falling 3.2%. This was perplexing since the airline beat estimates, reporting its quarterly profits more than doubled.
International Business Machines Corp. (IBM) fell over 4% after revealing it was under investigation by the SEC for violations in how it recognized revenue for certain deals.
On a positive note, the health care sector rose 1.8% with both Merck & Co., Inc. (MRK) and Pfizer Inc. (PFE) reporting better-than-expected quarterly results. The iShares NASDAQ Biotechnology Index (ETF) (IBB) jumped 3.2%.
At Tuesday’s close, the Dow Jones Industrial Average fell 42 points to 17,581, the S&P 500 was down 5 points at 2,066, the Nasdaq also dropped 5 points to 5,030, and the Russell 2000 lost 14 points at 1,145.
The NYSE Composite’s primary exchange traded almost 1 billion shares with total volume of 4 billion. The Nasdaq crossed 1.9 billion shares. On the Big Board, decliners outpaced advancers by 2.8-to-1 and decliners led by 2.4-to-1. Block trades on the NYSE increased to 5,770 from 4,541 on Monday.
Like the mid-cap stocks illustrated in the previous Daily Market Outlook, small-cap stocks continue to lag the big-cap indices.
Tuesday’s chart of SPDR S&P MidCap 400 ETF (MDY) showed a sluggish index struggling to maintain a modest consolidation. But today’s chart of iShares Russell 2000 Index (ETF) (IWM) is worse. The trend is down, volume in highest on down days, and it has been unable to hold above its 50-day moving average and the resistance line at $114.48.
Conclusion
As noted recently, small- and mid-cap stocks led the advance for several years. Now, however, they, along with the Dow transports, appear to be a drag on the market.
I believe this is telling us that the broader market is range-bound. A failure to rally beyond the current levels and broaden the advance with mid- and small-cap participation is worth noting.
The market is telling us that it is better to wait than plunge into such murky waters.
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.
