On Wednesday, stocks fell again as election jitters marked the S&P 500’s longest streak of daily declines in almost five years. There was also some concern over the Federal Reserve’s statement on interest rates and the state of the economy.
Falling oil prices also put pressure on the S&P 500, and improved earnings in some key stocks failed to halt a thus far minor sell-off. Yesterday the S&P 500 fell 0.7%, the Dow Jones Industrial Average lost 0.4%, and the Nasdaq fell 0.9%.
The Fed’s decision yesterday to leave rates unchanged hit utilities, real estate and telecommunications more than less interest-rate sensitive sectors.
A much-higher-than-expected crude oil stockpile sent crude oil WTI futures (December) down 2.85 to $45.32 per barrel.
But the prime negative mover appears to be the presidential election. The tighter the polls become, the higher the uncertainties, especially among global investors who thought that Ms. Clinton had the election “in the bag.”
The Stoxx Europe 600 fell 1.1% for its eighth straight loss, Japan’s Nikkei dropped 1.8% and the Hang Seng index (Hong Kong) fell 1.5%.
The Dow Jones Industrial Average fell 77 points to 17,960; the S&P 500 closed at 2,098, off 14 points; the Nasdaq lost 48 at 5,106; and the Russell 2000 dropped to 1,163, down 15 points. The NYSE’s primary exchange traded just under 1 billion shares with total volume of 4.2 billion shares. The Nasdaq crossed 2.1 billion shares. On the Big Board, decliners outpaced advancers by 3.2-to-1, and on the Nasdaq, decliners led by 2.9-to-1. Blocks on the NYSE decreased to 5,234 from 5,756 on Tuesday.
The Dow industrials broke down from a right triangle, falling below the September low of 17,994 and several connecting points. But it fell on average volume, and breadth at a mere 3.2-to-1 is not high for a major breakdown. Also the VIX, CBOE Volatility Index, fell yesterday from Tuesday’s high of 20.43, closing yesterday at 19.32 (see Tuesday chart of the VIX).
Conclusion: The U.S. stock market has suffered a mild (so far) breakdown. But with complacent numbers from the VIX “Fear Index,” and mild overall breadth and volume numbers, the decline does not appear severe enough to continue beyond the next levels of support.
That support in each index is represented by its 200-day moving average. For the DJIA it is at 17,750, the S&P 500’s is at 2,081, and the Nasdaq is at roughly 4,940.
Work up your list of stocks to buy, since it appears that we will have an opportunity to do some bargain hunting.
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.
