On Tuesday, stocks sagged slightly as geopolitical risks overcame buyers as safer havens appeared more attractive.
With the threat of the U.S. becoming involved in a military conflict and the lack of details on tax reforms and infrastructure spending, stocks have recently turned flat. Sectors that benefited from the “Trump trade,” like financials and industrials, have sagged.
The Dow Jones Industrial Average closed basically unchanged from Monday while the S&P 500 fell 0.1%, the Nasdaq lost 0.2%, while the Russell 2000 gained 0.7%.
The financial sector of the S&P 500 fell 0.3%, and the technology sector lost 0.4%. Technology was pulled down by a slide in Apple Inc. (NASDAQ:AAPL) of 1.1%, as well as Facebook Inc (NASDAQ:FB), off 0.8%, and Amazon.com, Inc. (NASDAQ:AMZN), down 0.5%.
Crude oil continued last week’s rebound following Saudi Arabia’s indication that it would extend OPEC’s production cut beyond June. Crude oil (WTI) closed at $53.38, up 0.6%. Gold (June) hit the highest level in five months at $1,272, up 1.5%.
At the close, the Dow Jones Industrial Average fell 7 points to 20,651, the S&P 500 lost 3, closing at 2,354, the Nasdaq fell 14 points to 5,867, and the Russell 2000 closed at 1,377 for a gain of 10 points. The NYSE’s primary exchange traded 780 million shares with total volume of over 3 billion shares. The Nasdaq crossed 1.8 billion shares. On the Big Board, advancers outpaced decliners by 1.6-to-1, and on the Nasdaq, advancers led by 1.3-to-1. Blocks on the NYSE increased to 6,238 from 5,438 on Monday.
The fear factor of international politics didn’t have much of an impact on the S&P 500. The support line of the apex of the triangle noted last week was recovered yesterday in the final hour of trading. And the 50-day moving average at 2,349.60 was recovered, as well. Negative volume fell to below average, and even though the VIX “Fear Index” (below) shook off a one-year malaise, it closed in the middle of its spread for the day — not very scary.
Conclusion: The stock market is currently being controlled by the mild fear that the international situation may get out of control. But the fear is thus far mild. Gold rose 1.5%, but the metal has been highlighted for weeks as “undervalued.”
Unless, we see a clear, high-volume break from current levels, it is prudent to do mild selling in order to accumulate cash that will be put to work in stocks like our Trade of the Day, Semtech Corporation (NASDAQ:SMTC).
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.
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