Dow Backpedals Ahead of the Fed's Policy Meeting

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"This is a huge week on the news front, and today we did see some selling, but nothing major," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "When you have gross domestic product (GDP) figures, the Fed's latest rate decision, and monthly jobs data all due out this week, there is a lot of positioning needed ahead of that." Against this backdrop, the Dow Jones Industrial Average (DJI) was hovering south of breakeven by the time the closing bell rang.

Continue reading for more on today's market, including :

  • Schaeffer's Senior Trading Analyst Bryan Sapp opines that he's "open for anything and everything" ahead of the Fed's and European Central Bank's (ECB) policy decisions due later this week.
  • The latest installment of The Week Ahead highlights upcoming events for MasterCard ( MA ) and Sodastream ( SODA ).
  • Weekly call buyers pounced on Barrick Gold ( ABX ) as the firm prepares to report quarterly earnings before this Thursday's opening bell.
plus...
    Pending home sales slip in June, Caterpillar ( CAT ) reveals another share buyback program, and Expedia ( EXPE ) continues to attract bearish brokerage attention.

The Dow Jones Industrial Average (DJI - 15,521.97) spent the entire session parked in the red, hitting an intraday low of 15,482.27 just before noon. However, the blue-chip barometer managed to narrow its daily loss to 36.9 points, or 0.2%. The Dow's seven advancers were led by Caterpillar's ( CAT ) 1.2% gain, while Bank of America (BAC) paced the Dow's 23 decliners with a loss of 1.4%.

The S&P 500 Index (SPX - 1,685.33) followed a similar path today, and ended up shedding 6.3 points, or 0.4%, by the close. Elsewhere, the Nasdaq Composite (COMP - 3,599.14) finished 14 points, or 0.4%, lower.

The CBOE Market Volatility Index (VIX - 13.39) rose to an intraday high of 13.86 before pulling back slightly to close just 0.7 point, or 5.3%, higher.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"It was nice to see more buyouts and mergers," continued Detrick. "Onmicom (OMC) merged with Publicis, Perrigo (PRGO) bought Elan (ELN) for $8.6 billion, and Hudson Bay bought out Saks (SKS) for $2.4 billion. We've seen a big pick-up in deals over the past few months, and I continue to think this is a sign of improving confidence that bodes well for the overall economy. If firms weren't optimistic about the future, they wouldn't be doing all of these deals."

3 Things to Know About Today's Market :

  • The National Association of Realtors (NAR) said pending home sales dropped by 0.4% in June, which was attributed to a rise in mortgage interest rates. However, on a year-over-year basis, home sales were up 10.9%. (MarketWatch)
  • Caterpillar ( CAT ) announced plans to buy back $1 billion of its shares from France-based Societe Generale, 11 million of which will be purchased immediately at current market prices. This latest share repurchase program comes on the heels of a separate $1-billion buyback initiative completed just last month. (USA Today)
  • Hudson's Bay Co. -- owner of Lord & Taylor -- agreed to acquire Saks (SKS) for around $2.4 billion, which works out to be $16 per share. This denotes a 5% premium to Friday's closing price of $15.31. The buyout is expected to be complete by the end of the year, although it still requires approval from the luxury retailer's shareholders. (CNBC)

5 Stocks We Were Watching Today :

  1. Financial giant Bank of America (BAC) scored some upbeat brokerage attention at Guggenheim.
  2. One neutral trader constructed a long straddle on Cisco Systems (CSCO) using January-dated options.
  3. Expedia ( EXPE ) was slapped with yet another analyst downgrade following Thursday's poorly received earnings report.
  4. Droves of near-term speculators zeroed in on Apple's (AAPL) weekly call options.
  5. Front-month traders placed bullish bets on Micron Technology (MU) , despite today's drop.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude oil futures closed at yet another two-week low despite reports of unrest in the Middle East, due to concerns over a slowdown of economic growth in China. By the time the dust settled, September-dated oil was off 15 cents, or 0.1%, to end at $104.55 per barrel.

Meanwhile, gold futures finished higher, as investors await the Fed's latest monetary policy update. The August contract added $6.90, or 0.5%, to close at $1,328.40 per ounce.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: ABX , CAT , EXPE , MA , SODA

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