Stocks flatlined for most of the day on Tuesday and ended mixed. A sharp decline in shares of Apple Inc. (AAPL) had a negative impact on the broader market, and the technology sector fell 0.7%.
Institutional favorite Apple plunged 3.2% in reaction to a Credit Suisse report showing the company cut iPhone 6 component orders by up to 10%. Its analysts reduced their fiscal 2016 earnings forecast for Apple by 6%.
Apple suppliers were also hit hard. Cirrus Logic, Inc. (CRUS) plummeted 8.6%, Broadcom Corporation (BRCM) dropped 3.3% and Avago Technologies Ltd (AVGO) lost 5.3%. The PHLX Semiconductor (SOX) was down 1.8%.
China’s consumer inflation fell, renewing worries over a slowdown in the world’s second largest economy. China accounts for 40% of global copper demand, according to The Wall Street Journal, and copper futures hit their lowest level since mid-2009. Miner Freeport-McMoRan Inc (FCX) declined 6.3%.
The Shanghai Composite index fell 0.2%. But Japan’s Nikkei 225 rose 0.2% to a two-and-a-half-month high, the result of a weakening yen.
The euro fell 0.3% against the U.S. dollar to $1.0725. Crude oil was up 0.8% to $44.21 a barrel. Gold was basically flat at $1,088.20 an ounce.
At Tuesday’s close, the Dow Jones Industrial Average gained 28 points at 17,758, the S&P 500 rose 3 points to 2,082, the Nasdaq fell 12 points to 5,083, and the Russell 2000 gained 3 points at 1,188.
The NYSE Composite’s primary exchange traded 845 million shares with total volume of 3.8 billion. The Nasdaq crossed 1.9 billion shares. On the Big Board, advancers outpaced decliners by 1.3-to-1, and on the Nasdaq, decliners led by a small margin. Block trades on the NYSE fell to 5,027 from 5,273 on Monday.
Bulls who are depending on the small and mid caps to bail them out need more upside volume. In order to successfully attack the much-discussed seven months of overhead, breadth and volume are basic requirements.
And despite the fact that both iShares Russell 2000 Index (ETF) (IWM) and SPDR S&P MidCap 400 ETF (MDY) are sustaining their near-term uptrends, longer-term weakness is present.
Conclusion
IWM is weaker than MDY since the small-cap ETF is stuck in a wider trading zone and volume is very weak. However, while both are in intermediate downtrends, when viewed from the perspective of trend, the mid-cap ETF appears weaker since it is trading in a very narrow zone from $262 to $270.
With Apple fading, this is no time to commit cash. The tech darling’s falter had a broad negative impact on its suppliers and delivered a psychological blow to the entire stock market.
Stand aside and let this work itself out. So far, it appears the mild correction has more correcting to do.
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.
