Stocks’ winning streak, which began over a week ago, ended Tuesday. The Dow Jones Industrial Average fell 1.1%, the S&P 500 was down 1.3% and the Nasdaq lost 1.5%. The decline was led by energy and financial stocks.
An official at JPMorgan Chase & Co. (JPM) said the bank plans to hold more money than analysts expected in case of defaults on debt from energy companies. JPM tumbled 4.2%, while the KBW Nasdaq Bank Index fell 2.9%.
Further pressure on stocks came from Saudi Arabia’s oil minister who said not to expect production cuts. Iran’s oil minister has also said his country will not join in any proposed cuts. WTI fell 4.6% on Tuesday to $31.87 a barrel, and energy stocks followed suit with a 3.2% drop.
Home Depot Inc (HD) jumped 1.4% after reporting strong sales gains in the fourth quarter. And Toll Brothers Inc (TOL) gained 3.8% on higher-than-expected quarterly revenues.
Investors sought safer havens, pushing gold up 1.1% to $1,222.30 an ounce. And the yield on the 10-year Treasury note fell to 1.74% from 1.77% on Monday as bond prices rose.
At Tuesday’s close, the Dow Jones Industrial Average fell 189 points to 16,432, the S&P 500 lost 24 points at 1,921, the Nasdaq declined 67 points to 4,504 and the Russell 2000 was down 10 points at 1,012.
The NYSE Composite’s primary exchange traded 942 million shares with total volume of 3.8 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners led advancers by 2-to-1, and on the Nasdaq, decliners led by 2.2-to-1. On the NYSE, block trades fell to 5,103, down from 5,527 on Monday.
The charts of SPDR S&P MidCap 400 ETF (MDY) and iShares Russell 2000 Index (ETF) (IWM) are similar in that both failed to follow through and establish a successful attack on their overhead. Note the lower volume on buying days than selling days on both as well.
Also of note is that IWM is slightly weaker in that it reversed before reaching its 50-day moving average. MDY hit the 50-day before falling away from it.
Conclusion
The action in both the mid and small caps is distinctly bearish. Resistance abounds and a lack of momentum is obvious. Sellers should take advantage of current prices since it is likely they won’t see them much higher in the near future.
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.
