A powerful sell-off that started last week in the wake of
expectations that the Federal Reserve will begin tapering its
quantitative easing program at the September FOMC meeting picked
up more steam on Monday.
Federal Reserve Bank of Dallas President Richard Fisher urged
the FOMC to go ahead with plans to scale back its bond-buying
program and not give in to market pressure opposing the move. In
the wake of the announcement, stocks, bonds, and commodities have
all recorded sharp losses, as investors show their concern about
how the economy will perform in the absence of stimulus.
Although the major averages finished well-off their lows of
the session, the Dow still fell around 140 points and both the
S&P and Nasdaq recorded losses of more than 1 percent.
The Dow Jones Industrial Average lost 140 points, or 0.94
percent, to close just below 14,660.
The S&P 500 fell 19 points, or 1.21 percent, to finish at
The Nasdaq shed 36 points, or 1.09 percent, to 3,321.
Crude oil recorded gains to start the week on Monday, with the
Brent/WTI spread tightening. NYMEX crude futures rose 1.56
percent to $95.15 while Brent crude contracts added 0.25 percent
to $101.16 late in the day. Natural gas futures lost $0.03, or
0.77 percent, to $3.74.
Precious metals continued their fall on the session. At last
check, COMEX gold futures were down 0.61 percent to $1,284.10.
Silver contracts were last trading lower by 1.45 percent to
$19.67. Copper also fell on the session, and was last down 1.65
percent to $3.0490.
In the grains complex, both corn and wheat were lower. Corn
contracts fell 1.75 percent while wheat was down 2.45 percent.
Movers in soft commodities included sugar and cotton. Sugar
futures added 1.24 percent while cotton was down a little less
than 2 percent.
Treasury prices actually traded higher on Monday, but remain
in a steep downtrend, causing interest rates to rise. Near the
close of equities, the iShares Barclays 20+ Year Treasury Bond
) was up 0.54 percent to $108.96.
Yields, which have been moving aggressively higher over the
last month, were as follows: The 2-Year Note yield was at 0.39
percent while the yield on the 5-Year Note was sitting at 1.45
percent. Yields on the 10-Year Note and 30-Year Bond were 2.54
percent and 3.56 percent, respectively.
The U.S. Dollar, which has been rising amid the sell-off in
stocks, was slightly higher on the day. At last check, the
PowerShares DB US Dollar Index Bullish ETF (NYSE:
), which tracks the performance of the greenback versus a basket
of foreign currencies, was up 0.07 percent to $22.35.
The closely watched EUR/USD pair was last down 0.13 percent to
$1.3123. Overall, volatility was limited in the currency market
on Monday. Other movers included the USD/CAD, which rose 0.35
percent, and the AUD/USD, which was trading up 0.28 percent.
Volatility and Volume
The VIX rose another 6 percent to 20.03 and is trading at the
high-end of its 52-week range. The widely watched measure of
volatility expectations could see more gains this week as
investor uncertainty rises.
Volume remained very heavy as recent trading sessions have
been the most active of the year. Around 207 million SPDR S&P
500 ETF (NYSE:
) shares traded hands on Monday compared to a 3-month daily
average of around 140 million.
Shares of Vanguard Health Systems (NYSE:
) skyrocketed on Monday morning after Tenet Healthcare (NYSE:
) agreed to buy the company for a big premium. The deal, valued
at $1.73 billion, sent Vanguard up 68 percent while Tenet shares
added around 5 percent.
Isis Pharmaceuticals (NASDAQ:
) hit a new 52-week high after reporting positive Phase II
clinical trial data for a drug being tested in the treatment of
high triglycerides and type 2 diabetes.
Shares of FleetMatics (NYSE:
) had climbed around 11 percent in afternoon trade, although the
reason for the move was not immediately clear.
Keynote Systems (NASDAQ:
) rose almost 47 percent after the company agreed to be acquired
by private equity firm Thoma Bravo LLC for $20 per share in cash,
or roughly $395 million.
) added almost 8 percent near the close after a positive mention
in Barron's over the weekend.
Hercules Offshore (NASDAQ:
) rose around 6 percent after the company increased its stake in
Discovery Offshore and divested of almost all of its domestic
lifeboat assets for $54 million in cash. The company's stake in
Discovery now gives it a majority interest.
Shares of Chinese ADR YY Inc (NASDAQ:
) had lost more than 13 percent near the close. The company went
public last November and the stock has rallied sharply in recent
) shares fell more than 11 percent after the stock was downgraded
at both Deutsche Bank and Leerink Swann.
Coal name Alpha Natural Resources (NYSE:
) fell roughly 8 percent on Monday amid weak sentiment in the
beleaguered coal sector. Other losers included Cliffs Natural
), which fell nearly 8 percent, and Peabody Energy (NYSE:
), which was down 7 percent.
) fell more than 2 percent on Monday after the company disclosed
a security lapse on Friday that exposed the contact information
of around six million users.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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