Dow Falls South of 15,000 as the Bears Stay in Control

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"We saw a flight to safety today," said Schaeffer's Senior Equity Analyst Joe Bell, CMT, of a day where the Dow Jones Industrial Average (DJI) suffered a triple-digit drop and closed south of the 15,000 level for the first time since May 6. "Most growth-sensitive sectors were dragged down, and bonds experienced a small bounce after their recently horrific price action."

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

plus...
    The U.S. economy grows at a modest pace, labor costs drop, and Sprint Nextel ( S ) hopefuls zero in on short-term calls.

The Dow Jones Industrial Average (DJI) spiraled lower again today, finally ending with a loss of 217 points, or 1.4%, at 14,960.59. The index closed a hair below its 40-day moving average, which had not been violated on a daily closing basis since Dec. 28. All 30 Dow components closed with losses today, and bringing up the rear was Intel Corporation ( INTC ), down 2.6%. The Dow's "best" performer was Cisco Systems ( CSCO ), which edged down 0.2%.

The S&P 500 Index (SPX) , also breached its 40-day trendline to the downside, as it stumbled 1.4%, or 22.5 points, to settle at 1,608.90. Unlike the Dow, which lost its grip on 15,000, the SPX remains north of the psychologically significant 1,600 mark. The Nasdaq Composite (COMP) fared the best of the three major indexes -- albeit barely. At the close, the tech-rich grouping was off 43.8 points, or 1.3%, at 3,401.48.

Meanwhile, the CBOE Market Volatility Index (VIX) zoomed 7.6% higher, adding 1.2 points to close at 17.50, the barometer's highest settling point since April 18. The VIX is now perched above its 80-week moving average, above which it has managed just one weekly close since last June.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"There wasn't much to cheer about today," summarized Bell, "as every major sector finished in the red. We had a slew of economic reports this morning that were mostly worse-than-expected, and the downward momentum that began late yesterday continued through most of today. Many investors will now look ahead to May retail sales tomorrow and the big jobs report on Friday."

3 Things to Know About Today's Market :

  • In 11 of the Federal Reserve's 12 districts, the economy showed "modest-to-moderate" growth during the last six-week reporting period. (The outlier, Dallas, reported "strong" growth.) The findings did indicate that the "sequester," which began in March as government spending tightened, is starting to have an impact on hiring plans. (Bloomberg)
  • ADP's report on jobs growth in the private sector -- a precursor to Friday's nonfarm payrolls data -- showed the creation of 135,000 jobs last month. This was short of economists' expectations, but an improvement over April's reading. (Bloomberg Businessweek)
  • Factory orders climbed 1% in April , which wasn't as sharp an increase as expected. Elsewhere, first-quarter labor costs slipped at a seasonally adjusted annual rate of 4.3% across U.S. businesses, surprising economists who had projected a modest increase. Productivity was revised lower from earlier reports, to show a modest gain of 0.5%. (Reuters, FOX Business)

5 Stocks We Were Watching Today :

  1. As the takeover saga continues, weekly call buyers targeted Sprint Nextel ( S ) in hopes of capitalizing on short-term upside.
  2. Groupon ( GRPN ) speculators remain increasingly pessimistic .
  3. Optimistic Research In Motion (BBRY) traders scooped up a variety of out-of-the-money calls.
  4. Ford Motor (F) put sellers wagered on support at the 15 strike .
  5. Salesforce.com, Inc. (CRM) was greeted with a pair of price- target cuts (and one upgrade) following news of its ExactTarget (ET) buyout.

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 supplies dropped by more than expected last week -- to the tune of 6.3 million barrels -- spurring oil futures higher on the day. Oil for July delivery rose by 43 cents, or 0.5%, to close at $93.74 per barrel.

Gold recaptured some of its safe-haven appeal today, as equities continued their journey south. By the close, August-dated gold had pared some of its gains, to finish up $1.30, or 0.1%, at $1,398.50 an ounce. The precious metal had earlier reached an intraday peak of just above $1,410.

SCHAEFFER'S MARKET POSTURE



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This article appears in: Investing , Options

Referenced Stocks: BIDU , CSCO , GRPN , INTC , S

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