More Hawkish Fed Comments Pressure Dow Even Lower

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"Comments made by Atlanta Fed President Dennis Lockhart sparked today's selling," said Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "Still, volume was very light, and it seemed like the bulls used the news as an excuse to sell, versus the bears pushing things lower. All in all, when volume is light like it has been recently, intraday volatility is very likely. The bigger-picture earnings season is winding down, and overall, the economy is on much better footing than most thought just a month ago." Against this backdrop, the Dow Jones Industrial Average (DJI) suffered a near triple-digit loss for the session.

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

plus...
    A pair of Fed officials trigger even more stimulus worry, the U.S. trade gap narrowed, and International Business Machines ( IBM ) was the recipient of a bearish brokerage note.

The Dow Jones Industrial Average (DJI - 15,518.74) stumbled right out of the gate, and touched an intraday low of 15,473.40 during the morning hours of trading. By the close, the blue-chip bellwether was down 93.4 points, or 0.6%. Ahead of tonight's turn in the earnings confessional, Walt Disney ( DIS ) led the Dow's six advancers with a gain of 1.5%, while International Business Machines' ( IBM ) 2.3% decline paced the 24 laggards.

The S&P 500 Index (SPX - 1,697.37) breached the 1,700 level early on in the session, and ended 9.8 points, or 0.6%, lower. Meanwhile, the Nasdaq Composite (COMP - 3,665.77) snapped its streak of achieving new intraday highs to shed 27.2 points, or 0.7%, by the closing bell.

The CBOE Market Volatility Index (VIX - 12.72) hit an intraday peak of 12.93 this morning, and ended up finishing 0.9 point, or 7.4%, higher. However, the "fear barometer" remained below its 10-day moving average for a fourth consecutive day.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Once again, buyers stepped up later in the afternoon," commented Detrick. "Sure, we were still firmly in the red for the day, but well off the session lows. This is one constant we've seen time and time again -- the bulls come in to buy late in the day. That is exactly what you'd want to see."

3 Things to Know About Today's Market :

  • Dennis Lockhart and Charles Evans -- presidents of the Atlanta Fed and Chicago Fed, respectively -- fanned the anxiety flames after separately suggesting that the central bank could scale back its current bond-buying program as soon as next month. These comments came on the heels of those made by Dallas Fed President Richard Fisher, who made a similar observation yesterday. (CNBC)
  • The Commerce Department said the U.S. trade deficit narrowed by a larger-than-expected 22.4% in June to $34.2 billion, marking its lowest level since the fall of 2009. The contraction was attributed to a 2.5% drop in imports, and a 2.2% rise in exports -- the biggest increase for the latter in nine months. (MarketWatch)
  • Shares of American Eagle Outfitters ( AEO ) tumbled today, after the retailer slashed its second-quarter guidance . The company is now expecting a per-share profit of 10 cents, which is considerably lower than the 21 cents per share projected by analysts. AEO is slated to reveal its full quarterly earnings results on Aug. 21. Several other apparel retailers lost ground today in sympathy. (Reuters)

5 Stocks We Were Watching Today :

  1. Uptrending Priceline.com ( PCLN ) scored a price-target boost at Raymond James ahead of the opening bell.
  2. Near-term call volume ramped up on Citigroup (C) , despite the stock's price drop.
  3. NVIDIA (NVDA) is seeing plenty of skepticism from the Street ahead of Thursday's quarterly earnings report.
  4. Analysts at Credit Suisse slapped International Business Machines ( IBM ) with a downgrade in pre-market activity.
  5. One strategist utilized September-dated options to initiate a bull call spread on Potash Corp/Saskatchewan (POT) .

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 futures closed lower ahead of the regularly scheduled crude inventories report, as today's overall weak price action weighed on oil prices. By the time the dust settled, September-dated crude was down $1.26, or 1.2%, to finish at $105.30 per barrel.

Meanwhile, gold futures breached the $1,300 level following hawkish comments made by two Fed officials, as well as an upbeat trade gap report. The December-dated contract lopped off $19.90, or 1.5%, to end at $1,282.50 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.

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This article appears in: Investing , Options

Referenced Stocks: AEO , DIS , FB , IBM , PCLN

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