Fed Announcement, Global Concerns Drag Stocks Sharply Into the Red

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"There are various events and situations affecting the market right now, but the developing situation in the emerging markets and today's big Fed announcement to continue tapering were the big ones," summarized Schaeffer's Senior Equity Analyst Joe Bell, CMT. "Many sectors finished deep in the red, as all of the gains from yesterday's rally were erased." Against this challenging backdrop, the Dow Jones Industrial Average (DJI) suffered another triple-digit loss, and widened its year-to-date deficit to more than 5%.

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The Dow Jones Industrial Average (DJI - 15,738.79) was below breakeven the entire day, and ended not far from its intraday low, off 189.8 points, or 1.2%, by the close. By a hair, it was the index's lowest finish since Nov. 7. Four Dow stocks managed to close higher on the day, led by DuPont ( DD ), which added 1.9%. Bringing up the rear among the 26 declining issues was The Boeing Company ( BA ), which backpedaled 5.3% after its poorly received earnings report.

The S&P 500 Index (SPX - 1,774.20) endured similar selling pressure, settling with a decline of 18.3 points, or 1%. Meanwhile, the Nasdaq Composite (COMP - 4,051.43) relinquished 46.5 points, or 1.1%.


The CBOE Volatility Index (VIX - 17.35) spiked 1.6 points, or 9.8%, closing atop above the 17 level for the third time this year.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"We still find the major market averages hovering around their December 2013 lows," Bell observed, "but there is definitely an increasing amount of fear about how this currency situation will develop, and just how much of an impact it will have on U.S. markets."

5 Items on Our Radar Today :

  1. The Federal Reserve unanimously decided to reduce its monthly asset-buying program by an additional $10 billion to $65 billion, starting next month. The central bank also said it would likely make additional cuts at its March meeting. This was the last meeting chaired by Ben Bernanke, who will conclude an eight-year tenure on Friday. (The New York Times)
  2. Earnings for two Dow components were in focus today, as AT&T Inc. (T) and The Boeing Company ( BA ) both delivered tepid full-year forecasts. Although Ma Bell's bottom-line results topped estimates, the wireless concern also noted that earnings per share will expand at a "mid-single-digit" pace in 2014. Meanwhile, Boeing shares dipped in the wake of a cautious outlook for the current fiscal year. (Bloomberg; Reuters via The Chicago Tribune)
  3. Amazon.com, Inc. (AMZN) options traders are watching the $400 level as earnings approach.
  4. In the wake of Apple Inc.'s (AAPL) earnings-related pullback, short-term put buyers descended upon the stock's option pits.
  5. A number of brokerage firms adjusted their outlooks on Yahoo! Inc. ( YHOO ) this morning, following the search engine concern's fourth-quarter earnings report.

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 edged lower today, as investors reacted to the latest shift in monetary policy and considered a modest build in weekly supplies. The March contract dropped 5 cents to settle at $97.36 per barrel.

Gold prices advanced, as stocks retreated and emerging market concerns continued to percolate. By the close, the February contract had added $11.40, or 0.9%, to rest at $1,262.20 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.

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



This article appears in: Investing , Options

Referenced Stocks: BA , DD , FB , TSLA , YHOO

Schaeffer's Investment Research

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