Dow Ends Modestly Lower on D.C. Doubts

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Stocks spent most of the session in the red, thanks to lackluster retail sales data and lingering concerns about falling off the fiscal cliff. "Volume was very light today, but the selling is surely the result of continued fiscal-cliff fears," said Senior Trading Analyst Bryan Sapp. "There are rumblings of a compromise deal getting pushed through, but most traders seem to think that it won't accomplish anything." However, solid housing stats kept the bears in check, with the Dow Jones Industrial Average (DJI) trimming its deficit by the close.

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

plus...
  • Capitol Hill coffee cups with a message, bearish betting on General Electric ( GE ), and a John Wayne-esque session summary in our Tweet of the day.

The Dow Jones Industrial Average (DJIA) explored a range of 98 points, jumping as high as 13,174.88 in early trading, and touching an intraday nadir of 13,076.87 around midday. By the time the dust settled, the blue-chip barometer pared its deficit to 24.5 points, or 0.2% -- extending its losing streak to three sessions, and marking the first finish south of its 20-day moving average since Nov. 27. UnitedHealth Group ( UNH ) led the 17 declining blue chips, swallowing a loss of 1.2%, while Bank of America ( BAC ) paced the 13 advancers with a 2.6% gain.

The S&P 500 Index (SPX) also surrendered an early lead, giving up 6.8 points, or 0.5%, to end beneath its own 20-day trendline for the first time since Nov. 21. Turning to tech, the Nasdaq Composite (COMP) fared the worst of its peers, falling 22.4 points, or 0.7%, to breach its 20-day trendline for just the second time in five weeks.

The CBOE Market Volatility Index (VIX), on the other hand, ended decisively higher. By the close, the market's "fear barometer" added 4.8% to finish at its loftiest perch since late July.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Stocks with heavy exposure to China and Japan are holding up very well," noted Sapp. "This includes steel, coal, rare earths, and tech names like Baidu ( BIDU ), Youku Tudou (YOKU), and Sohu.com (SOHU). At this point, fears of the China bubble seem overblown, and should its economy stabilize, it could help lead us into a period of growth."

3 Things to Know About Today's Market :

  • President Barack Obama is flying back to Washington, D.C., tonight, cutting the holiday break short on Capitol Hill. The U.S. Senate is expected to vote on a scaled-down budget proposal backed by Obama and Senate Majority Leader Harry Reid, D-Nev., sometime tomorrow. With 53 Democrats seated, no fewer than seven Republicans would have to go against party lines in order to clear a filibuster.
  • The S&P/Case-Shiller 20-city home price index fell 0.1% in October on an unadjusted basis, but rose 0.7% after seasonal adjustments. On a year-over-year basis, the 20-city index improved 4.3%. The report topped economists' expectations, which called for an adjusted monthly rise of 0.5% and an annual gain of 4.1%.
  • The MasterCard Advisors Spending Pulse report showed domestic retail sales growth of just 0.7% in the two months preceding Christmas -- marking the weakest growth rate since 2008, and falling woefully short of expectations for 3% to 4% growth.

Plus ... With less than a week to go before we fall off the so-called "cliff," Starbucks Corporation (SBUX) had a message for Congress. CEO Howard Schultz asked baristas in over 100 D.C. and Virginia stores to write "Come Together" on all coffee cups on Thursday and Friday. "Rather than be bystanders, you and your customers have an opportunity -- and I believe we all have a responsibility -- to send our elected officials a respectful but potent message, urging them to come together to find common ground," Schultz wrote to employees this morning.

Today's Top Tweet :

"Holiday trade continues ... just saw a tumbleweed roll through Fifth Ave."
@tarhinitrade , 10:16 a.m.

5 Stocks We Were Watching Today :

  1. General Electric ( GE ) garnered attention from short-term option bears .
  2. Advanced Micro Devices (AMD) was popular among call buyers .
  3. Molycorp (MCP) traders gambled on more near-term gains .
  4. Skeptical speculators swarmed swooning Saks (SKS) .
  5. Fellow retailer Kohl's (KSS) fell to a new annual low.

Question of the Day :

Q : What is an American-style option?
A : American-style options can be exercised at any time before expiration day, from the moment the option is purchased or sold. All standard exchange-listed equity options are American style, while many indexes are European style, meaning they can only be exercised at a predetermined time (generally at expiration).

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

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Oil futures bounced back, thanks to revived geopolitical tensions in the Middle East and a softer U.S. dollar. Crude for February delivery gained $2.37, or 2.7%, to settle at $90.98 per barrel -- its loftiest close in more than two months. Gold futures also advanced, as February-dated gold edged up $1.20, or 0.1%, to close at $1,660.70 per barrel.

SCHAEFFER'S MARKET POSTURE

At the end of every market day, the staff at Schaeffer's Investment Research reviews the trading day in detail, covering major events and key market developments. Don't miss this critical, timely and insightful report. If you enjoyed today's edition of Market Recap, sign up here for free daily delivery straight to your inbox.



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.

All Rights Reserved. Unauthorized reproduction of any SIR publication is strictly prohibited.


This article appears in: Investing , Options

Referenced Stocks: AAPL , BAC , BIDU , GE , UNH

Schaeffer's Investment Research

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