Fed Fears Trigger a Volatile Session; Dow Closes in the Red

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"Say what you want about why the market dropped today, but it could be as simple as a break was due after a great run," quipped Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. The Dow Jones Industrial Average (DJI) headed into negative territory out of the gate and was off nearly 180 points at its intraday low before closing down nearly 107 points. "The standard factors were cited as reasons for today's decline -- concerns out of China, concerns about the Fed slowing their asset purchases, weakness in Europe, etc. etc."

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

plus...
    Banks are richer than ever, Intel ( INTC ) bears are starting to emerge, and Apple ( AAPL ) strategists expect short-term gains.

The Dow Jones Industrial Average (DJI) traded south of breakeven all day, hitting an intraday nadir of 15,229.53 in late-morning action. By the closing bell, it had pared some of its losses, down 107 points, or 0.7%, at 15,302.80. Of the 30 Dow members, 11 were higher on the day, with Hewlett-Packard ( HPQ ) up 2.4% to lead the advancers. Coca-Cola (KO), meanwhile, brought up the rear, declining 2.7%.

Trading was equally rocky for the S&P 500 Index (SPX) , which was down roughly 1.2% at its low-water point today. At the end of the session, the SPX had shed 11.7 points, or 0.7%, to 1,648.36. Elsewhere, the Nasdaq Composite (COMP) breached its 10-day moving average and gave back 21.4 points, or 0.6%, to settle at 3,467.52.


Not surprisingly, the CBOE Market Volatility Index (VIX) rallied as a result of the aforementioned price action. The VIX jumped 0.4 point, or 2.3%, to end the day at 14.83. The fear barometer did manage to reach its highest intraday level since April 22, peaking at 15.65.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Financials held up rather well today," Detrick said. "Other than that, though, it was a weak day. Interest-rate-sensitive stocks were hit hard again -- utilities, housing, and REITs all were crushed. This has been happening since last week, when the Fed hinted that they could slow their asset purchasing. In other words, interest rates may finally start to go higher, and traders are dumping anything that could be hurt from this."

3 Things to Know About Today's Market :

  • Mortgage applications dropped by 9% during the last week, per the Mortgage Bankers Association. Some attributed this slip to a rise in lending rates -- a 30-year fixed mortgage is, on average, set at 3.9%, or the highest it has been in a year. (Barron's)
  • The Federal Deposit Insurance Corp. (FDIC) noted that U.S. banks collectively booked net income of $40.3 billion in the first quarter of 2013, setting a record high. The figure improved nearly 16% from the first quarter of 2012. (CNBC)
  • The Nasdaq Exchange -- via its parent, NASDAQ OMX Group, Inc. (NDAQ) -- will pay a $10 million fine to atone for the botched Facebook Inc ( FB ) IPO. The fine's amount was disclosed today by the Securities and Exchange Commission (SEC). (The New York Times)

5 Stocks We Were Watching Today :

  1. Bearish betting accelerated on Intel Corporation ( INTC ), defying recent trends.
  2. Short-term option bulls expressed optimism on AT&T Inc. (T), following the debut of Ma Bell's Mobile Workplace cloud-based software.
  3. Priceline.com (PCLN) saw its price target lifted to $950 at Lazard.
  4. One aggressive Apple Inc. ( AAPL ) bull employed a synthetic long strategy to bet on short-term strength.
  5. Ford Motor (F) hit a fresh two-year peak , and was targeted by intermediate-term call buyers.

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 recoiled to its lowest level in four weeks today, as a reduced global economic growth forecast from the OECD sparked concerns over energy demand. July-dated oil surrendered $1.88, or 2%, to close at $93.13 per barrel.

Gold futures, on the other hand, muscled higher against a backdrop of falling equities and a weakened dollar. Gold for August delivery was up $12.10 today, or 0.9%, to settle at $1,391.80 an 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: AAPL , FB , HPQ , INTC , TSLA

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