Stocks closed the week on a sour note as the bearish action
Extending yesterday's emerging markets-driven sell-off, the
(INDEXSP:.INX) fell -2.09% to 1790.29 as investors fled from
Looking at the other indices, we saw substantial weakness in the
(INDEXRUSSELL:RUT), and the
e (INDEXNASDAQ:.IXIC) underperformed slightly despite positive
action in earnings winners
Sector-wise, economically sensitive and momentum-based sectors were
hurting today, with housing, financials, biotech, and social media
coming under significant pressure.
We also saw the
(INDEXCBOE:VIX) spike 31.7% to 18.14, a level not seen since
mid-December 2013, and the 10-Year US Treasury yield fell 14 bps to
2.735% as investors sought a safe haven.
There wasn't any one specific identifiable downside catalyst today,
but in hindsight, market conditions seemed ripe for a pullback.
Volatility in currencies, most notably in Argentina, has been
picking up significantly in recent days, driving worries about
contagion and a collapse in confidence. Traders are also
increasingly concerned about a drop in Chinese economic activity
and liquidity pressures in Turkey.
Stateside, earnings season has been underwhelming at best. The
S&P 500 is coming off a spectacular year and is slightly
overvalued based upon traditional metrics like P/E ratios.
Therefore, the current action in the US is best described as
aggressive profit-taking, as uncertainty is increasing following a
year of smooth gains amid low volatility.
In company news, we saw strong earnings from the aforementioned
Microsoft and Starbucks after the close Thursday, while this
morning, consumer staple giants
Procter & Gamble
) reported upside surprises. On the negative side,
(XRX) sold off after disappointing Wall Street.
On the commodities side, natural gas was the story today, crossing
the $5 mark for the first time since 2010 in reaction to the recent
spate of cold weather, which is driving up demand.
There were no US economic reports today.
Tomorrow's Financial Outlook
Barring some unforeseen international event over the weekend, the
biggest news on Monday will be Apple's (AAPL) fiscal fourth-quarter
earnings report, which is due in the afternoon.
Other names reporting earnings include
American Electric Power
(AEP) before the open, and
(X) after the close.
At 10:00 a.m. EST, December 2013 new home sales data will be
released. Consensus stands at 455,000.