Stocks rebounded Tuesday from a lower opening, but the rally fizzled mid-morning and they sank for the remainder of the day. The Dow Jones Industrial Average closed down 0.1%, the S&P 500 was off 0.7% and the Nasdaq lost 0.9%. The small-cap Russell 2000 led to the downside, falling 1.4%.
Stock holders sold on the opening following a reported trade imbalance in China. The report showed the 11th consecutive drop in imports, which were down 20.4% in September versus an expected decline of 15%. This indicates generally weak global demand for goods.
All 10 sectors of the S&P 500 fell Tuesday.
One of the day’s hardest hit groups was transportation stocks, with the Dow Jones Transportation Average falling 2.2%. Ryder System, Inc. (R) and JetBlue Airways Corporation (JBLU) led the transports’ decline, down 9.3% and 7.9%, respectively.
Biotech stocks continued their slide with the iShares NASDAQ Biotechnology Index (ETF) (IBB) falling 3.2%.
JPMorgan Chase & Co. (JPM) fell in after-hours trading after the bank reported a revenue decline and earnings that missed estimates.
Crude oil fell 0.8% to $46.70 a barrel following the monthly IEA oil market report as bearish forecasts of oversupply problems were circulated from commodity dealers. Gold rose 0.1% to $1,165.50 an ounce. The U.S. dollar was up against most Asian currencies but fell 0.2% against the euro, which closed at $1.1385.
At Tuesday’s close, the Dow Jones Industrial Average fell 50 points to 17,082, the S&P 500 lost 14 points at 2,004, the Nasdaq was down 42 points at 4,797, and the Russell 2000 was off 17 points at 1,148.
The NYSE Composite’s primary exchange traded about 850 million shares with total volume of 3.4 billion. The Nasdaq crossed 1.6 billion shares. On the Big Board and Nasdaq, decliners outpaced advancers by 2.6-to-1.
With industrial freight loading figures disappointing, the Dow Jones Transportation Average is finding difficulty holding onto last week’s gains. If the index falls below its 50-day moving average at 8,030, the market could face a Dow non-confirmation.
Conclusion
The Dow Jones Industrial Average is barely holding above the recently exceeded inflection point at 17,069 (see Monday’s Daily Market Outlook). But if the Dow Jones Transportation Average turns under the 50-day moving average, it could be that the recent advance has run its course. And if the two major Dow indices fail, then the bears will be back on the field.
That’s a lot of “ifs,” but there was little to encourage the bulls Tuesday since a non-confirmation in Dow language is a “divergence,” and that would negate the advance off of the Sept. 29 low. Thus, selling remains the best strategy.
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.
