S&P 500 Suffers Worst Selloff Since October

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Stocks continued their recent slide on Tuesday with the S&P 500 closing below its 100-day moving average for two consecutive days — the first time this has happened since October. After months in the doldrums, it seems like the bears are finally getting the upper hand.

This was the Dow Jones Industrial Average’s fourth consecutive daily loss, as it was down a fraction. The S&P 500 gained a fraction, the Nasdaq Composite lost 0.2% and the Russell 2000 lost 0.3%.

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Crude oil gained 3% to close at $59.89 on reports of renewed hostilities in Yemen, while gold gained a touch and the dollar was mixed.

Treasury bonds were again in focus as the 10-year yield moved towards the 2.45% level not seen since October as traders increasingly price in a rebound in economic growth, higher inflation, and the rising specter of Federal Reserve interest rate hikes as soon as September.

There has also been chatter about a surge of new supply this week from the U.S. Treasury swamping ho-hum demand, pushing down bond prices. The day’s losses represented a breakdown for the iShares 20+ Year Treasury Bond Fund (TLT), which violated a support level going back to November.

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On the economic front, the JOLTS survey showed job openings surged to an all-time record high in April. The result easily beat expectations and reinforces the expectation that the job market is tightening quickly enough to justify a Federal Reserve rate liftoff this year. Total job openings increased to 5.4 million, up from 5.1 million in March and the 5 million analysts were expecting.

The last piece of the labor market puzzle will be evidence of wage inflation, which we haven’t seen yet.

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Emerging market stocks struggled again with the iShares Emerging Markets (EEM) dropping to a fresh low as the ETF returns to prices last seen in March. That lifted the ProShares Short Emerging Markets (EUM) recommended to Edge subscribers to a gain of 4% since recommended in late May.

Airlines were under pressure again with Southwest Airlines (LUV) down 4.2% after issuing weaker-than-expected guidance for the second quarter. That lifted the Jun $20 JetBlue (JBLU) put options recommended to Edge Pro subscribers to a gain of nearly 70% since recommended on May 26.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/06/sp-500-suffers-worst-selloff-since-october-stocks/.

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