Stocks End Tumultuous Day in the Red After Fed Minutes Halt Rally

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"It was a tale of two days, really," quipped Schaeffer's Senior Technical Strategist Ryan Detrick, CMT, of today's session, as the Dow Jones Industrial Average (DJI) explored a range of nearly 300 points before settling with a 0.5% loss. "The morning started off great, as Fed Chairman Ben Bernanke's testimony before Congress showed he was comfortable with things. Then the Fed minutes came out in the afternoon, and things weren't quite as clear ... Fed members seem to disagree on just how soon to slow the asset purchases. Traders were left dazed and confused in the span of just a few hours. Uncertainty leads to selling, and that is what we got."

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

plus...
    Ben Bernanke speaks, existing home sales improve, and General Electric ( GE ) attracts option bulls after hitting a multi-year high.

At its highest point today, the Dow Jones Industrial Average (DJI) was up nearly 155 points to peg a new all-time apex of 15,542.40. At its intraday nadir, the index was off almost 122 points, at 15,265.96. When the dust settled, the Dow was down 80.4 points, or 0.5%, at 15,307.17, maintaining its grip above its 10-day moving average. Just seven Dow stocks managed to end the day higher, with Pfizer ( PFE ) leading the charge, up 1.8%. Pacing the lagging majority was Cisco Systems ( CSCO ), which dropped 2.8% on the day.

The day was similarly rocky for the S&P 500 Index (SPX) , which touched a new intraday peak of 1,687.18 and traded in a nearly 40-point range before coming to a stop at 1,655.35, down 13.8 points, or 0.8%. Underperforming its index peers was the Nasdaq Composite (COMP) , which fell 38.8 points, or 1.11%, to settle at 3,463.30, a hair below its respective 10-day trendline. The tech-laden index peaked at a new 12-year high of 3,532.04 early this morning before the sellers came in.

The CBOE Market Volatility Index (VIX) jumped 3.4%, or 0.5 point, amid the intraday market swing. Closing at 13.82, the VIX settled at its highest point since May 1.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"We've mentioned this a lot the past few days, but the Russell 2000 Index (RUT) trading near 1,000 is very significant," continued Detrick. "It took the S&P MidCap 400 Index (MID) 20 months to get over that psychological level, and it took the Dow 16 years to surmount it. With the RUT up there now and being firmly rejected, you have to wonder if -- once again -- this big round number will be trouble."

3 Things to Know About Today's Market :

  • All eyes and ears were focused on Federal Reserve Chairman Ben Bernanke this morning, who confirmed the central bank will not be quick to abandon its bond-buying campaign (or raise interest rates), as the U.S. economy remains in recovery mode. (USA Today)
  • Existing home sales rose by 0.6% in April, to a seasonally adjusted annual rate of 4.97 million. This figure -- reported by the National Association of Realtors -- was the highest reading since November 2009. On a year-over-year basis, resales improved by 9.7%. (Reuters)
  • Fed minutes showed dissention in the ranks , as a handful of Federal Open Market Committee (FOMC) members want to tap the brakes on the last round of quantitative easing as early as next month. Another wants to amplify the bond-buying program, and others fall toward the middle in the battle between hawks and doves. (Forbes)

5 Stocks We Were Watching Today :

  1. General Electric ( GE ) notched a new multi-year high , inspiring bullish option traders.
  2. One J.C. Penney Company (JCP) put buyer may anticipate notable downside over the next few weeks.
  3. An options speculator used calls and puts to place a bearish bet on Herbalife Ltd. (HLF).
  4. Barrick Gold Corporation (ABX) enjoyed increased attention from call buyers.
  5. Sodastream International (SODA) was smacked with a downgrade at J.P. Morgan Securities.

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 turned south on Wednesday, pressured by indications that the Fed may be ready to alter its accommodative stance in the near future. Oil for June delivery dropped $1.90, or 2%, to close at $94.28 per barrel.

Gold also slipped, as speculation over an imminent QE3 slowdown diminished demand for the metal as a currency hedge. June-dated gold shed $10.20, or 0.7%, to finish at $1,367.40 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: AAPL , CSCO , GE , PFE , YHOO

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