Dow Falls for a Third Straight Day on Tapering Fears

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"The negative momentum continued today, although small-caps actually became the leader rather than the laggard," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "After a strong November jobs report, December is off to a very weak start so far. Much of this can be attributed to late-year profit taking, but the short-term trend is definitely down right now." As tapering fears continued to plague investors, the Dow Jones Industrial Average (DJI) closed in the red for a third consecutive session.

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

plus...
    Weekly jobless claims rose more than expected, retail sales gained ground in November, and Starbucks Corporation ( SBUX ) attracted a rare group of put buyers.

The Dow Jones Industrial Average (DJI - 15,739.43) faltered yet again today, and sank to an intraday low of 15,703.79 around midday. By the close, the blue-chip index was down 104.1 points, or 0.7%. The Dow's six advancers were led by Exxon Mobil Corporation's ( XOM ) 1.2% gain, while a 2.3% drop for The Coca-Cola Company ( KO ) paced the 24 decliners.

The S&P 500 Index (SPX - 1,775.50) also spent most of the session south of breakeven, and settled 6.7 points, or 0.4%, lower. Meanwhile, the Nasdaq Composite (COMP - 3,998.40) shed 5.4 points, or 0.1%, for the day.


Elsewhere, the CBOE Volatility Index (VIX - 15.54) reached an intraday high of 16.09 around 12:30 p.m. ET today, but pared some of its gains to finish just 0.1 point, or 0.8%, higher.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Again, the best thing about today's market was the performance of small-caps," Bell reiterated. "After lagging the rest of the market since the end of November, they all of a sudden became the front-runners. Some strength from this area could be a good sign, as small-caps led for most of the rally this year."

3 Things to Know About Today's Market :

  • The Labor Department said first-time jobless claims climbed by 68,000 last week to 368,000 -- surpassing consensus estimates, and marking their highest level in two months. Meanwhile, the four-week moving average for new filings rose by 6,000 to 328,750. (MarketWatch)
  • Retail sales rose by 0.7% in November, according to the Commerce Department. This latest figure marked the largest increase in five months, and slightly exceeded economists' projections. (Reuters)
  • Facebook Inc (FB) surged today amid news that it will be joining the S&P 500 Index (SPX) at the end of next week, replacing Teradyne, Inc. (TER). The Internet stock will also replace Williams Companies, Inc. (WMB) on the S&P 100 Index (OEX). In other news, FB unveiled a new version of Instagram , its popular photo-sharing service. (BloombergBusinessweek, USA Today)

5 Stocks We Were Watching Today :

  1. Apple Inc (AAPL) received a bullish brokerage note following a lawsuit development involving Samsung Electronics Co.
  2. Option bears showed an unusual interest in Starbucks Corporation ( SBUX ) , and scooped up the java giant's near-term puts.
  3. Groupon Inc's (GRPN) sentiment backdrop reveals a bearish bias toward the security, despite its technical prowess.
  4. Put volume accelerated on Molycorp Inc (MCP) , as speculators wagered on record lows for the mining concern.
  5. Short-term traders targeted Twitter Inc (TWTR) , with both call and put players showing a preference for weekly options.

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 futures eked out a minor gain today, as a rise in retail sales strengthened energy demand projections. By the time the dust settled, the January contract tacked on 6 cents to end at $97.50 per barrel.

Conversely, gold futures declined amid fears that a possible tapering of the Fed's asset-buying program is imminent. February-dated gold fell $32.30, or 2.6%, to close at $1,224.90 an ounce -- marking the largest single-session percentage and point decline since early October.

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.

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


This article appears in: Investing , Options

Referenced Stocks: BBRY , KO , LULU , SBUX , XOM

Schaeffer's Investment Research

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