On Tuesday, stocks ended lower due to renewed expectations of an interest rate increase by the Federal Reserve this year. Stocks, bonds and gold fell, and the dollar rose as foreign investors flocked to the dollar. The British pound sterling fell 0.9% vs. the buck to a 31-year low, at $1.27, and the euro closed at $1.12, down 0.05%.
Generally, higher-yielding investments like bonds and utility stocks (down 2.2%) declined as investors cashed in on the gains made earlier. But crude oil, in an odd twist, closed flat to slightly lower based on the inability of OPEC to come to an agreement on production limits. November crude oil (WTI) lost 20 cents at $48.61 per barrel.
Prices on crude oil have risen 8.8% since last Wednesday, the day that OPEC last met. U.S. stockpiles of crude oil have been falling and that, too, contributed to an upward slope in prices.
Despite a fall of 0.2% in the technology sector, Apple Inc. (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG) resisted the decline, each rising 0.4%. And Micron Technology, Inc. (NASDAQ:MU) rose slightly before an earnings report after the market closed.
Gold fell sharply, down 3.3% at $1,266.30 per ounce for the biggest loss in two and a half years. Silver fell 5.7% to $17.71 per ounce, both were for October delivery. However, for the year gold is still up over 19% and silver has gained over 28%.
At the close, the Dow Jones Industrial Average fell 85 points, closing at 18,168; the S&P 500 was down 11 at 2,150; the Nasdaq lost 11 points to close at 5,290; and the Russell 2000 closed at 1,240, off 6. The NYSE’s primary exchange traded 898 million shares with total volume of 3.7 billion shares, and the Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by about 1.2-to-1, and on the Nasdaq, decliners led by 1.6-to-1. On the NYSE, blocks increased to 5,151, up from 4,370 on Monday.
As our readers know, the NYSE Composite Index includes all stocks traded on the NYSE. Thus, when it appears to be forming a three-month rounding top I treat it seriously. The line to watch is the support line at 10,610. The index brushed against that line at its low of the day at 10,597.
Conclusion: Caution flags are flying because of a major breakdown in gold. That event was apparently caused by a mere rumor of a rate increase by the Fed, and in terms of dollars that put pressure on the price of gold.
Technically, that’s a concern but what troubles me is the length of time it has taken to break through tops on the major indices. In three months there were three negative attempts to break out and each failed. In baseball the major averages would have struck out, and at Broad & Main, in New York City that may also turn out to be true.
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.
