Stocks suffered Tuesday as investors headed for safe havens like gold and bonds in light of global growth concerns, lower Q1 earnings projections and worries over oil prices.
Gold futures advanced 0.9% to $1,228.40 an ounce. And rising bond prices caused the yield on 10-year Treasury note to fall to 1.73% from 1.78% on Monday.
But every sector of the S&P 500 declined, including the traditionally safer heath care and utilities sectors. In fact, utilities were the day’s worst-performing sector, falling 1.9%.
New rules limiting corporate tax inversion mergers caused Allergan plc (AGN) to plummet nearly 15% as they call into question its merger with Pfizer Inc. (PFE). But PFE jumped more than 2% on the news. (I recommended PFE stock as the Trade of the Day on April 1.)
WTI crude oil closed up 0.5% at $35.89 a barrel after being in the red for most of the day, but no one seemed to be able to come up with the reason for the late rally. Analysts expect U.S. inventories, which are near all-time highs, to have increased by 3.3 million barrels last week.
At Tuesday’s close, the Dow Jones Industrial Average was down 134 points at 17,603, the S&P 500 fell 21 points to 2,045, the Nasdaq dropped 48 points at 4,844 and the Russell 2000 was off 13 points at 1,096.
The NYSE Composite’s primary exchange traded over 1 billion shares with total volume of 4.1 billion. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by 2.3-to-1, and on the Nasdaq, decliners led by 2.4-to-1. Block trades on the NYSE increased to 6,391 from 5,214 on Monday.
The Dow Jones Utility Average has dramatically outperformed the other major indices this year, advancing 13.6%. The angle of its advance would have been hard to hold even for technology stocks under heavy accumulation, let alone stodgy utility stocks.
After hitting an all-time on Friday, the Dow Jones Utility Average has pulled back this week. So far, the significance of the price adjustment is purely technical, and there is little in the way of cause for fundamental concern.
Conclusion
For now, the “correction” in each index appears to be minor… and oh so predictable. As the major indices approached the thick levels of overhead resistance, it was clear to most that the advance had to slow soon. But I admit to jumping the gun on caution.
Now, with the stable Dow Jones Utility Average on the decline, how far will a retreat on the rest of the field take us?
As I noted a few days ago, the answer is more fundamental than technical, with heavy dependence on corporate earnings and even more on Federal Reserve policy. But I plan to review the support zones for the major indices this week.
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.
