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Markets Reverse Course Amid Budget Stalemate
By: Schaeffer's Investment Research
"Despite the fact that we had several earnings reports this
morning, everyone's attention is simply on Congress and its
inability to come to an agreement," mused Schaeffer's Senior Equity
Analyst Joe Bell, CMT. "With the debt ceiling deadline quickly
approaching, the market seems to be moving up and down on every bit
of news and rumor that surfaces relating to the situation." As a
Dow Jones Industrial Average (DJI)
closed the session with a triple-digit decline, breaking its
four-day winning streak.
Continue reading for more on today's market, including :
- Schaeffer's Senior Trading Analyst Bryan Sapp points out the "relative strength winner" in today's seesaw price action.
- Our Options Check-Up takes a closer look at the call- and put-buying activity surrounding these three popular stocks.
- J.C. Penney's ( JCP ) continued downtrend attracted speculators from both sides of the options fence.
- Debt ceiling talks in Washington yielded little progress, New
York manufacturing activity slowed in October, and Molycorp's (
) tumble lured put players to the options pits.
The Dow Jones Industrial Average (DJI - 15,168.01) spent the entire session in the red, sinking to an intraday low of 15,161.33 during the afternoon hours of trading. By the closing bell, the blue-chip bellwether was down 133.3 points, or 0.9%. Johnson & Johnson ( JNJ ) and Microsoft ( MSFT ) were the Dow's two advancers, both up 0.1%, while Home Depot ( HD ) and Procter & Gamble (PG) paced the 28 decliners with a loss of 1.5% each.
The S&P 500 Index (SPX - 1,698.06) was also parked in negative territory for most of the day -- aside from a brief blip higher just before noon -- and finished 12.1 points, or 0.7%, lower, and below the key 1,700 level. Meanwhile, the Nasdaq Composite (COMP - 3,794.01) shed 21.3 points, or 0.6%.
Elsewhere, the CBOE Volatility Index (VIX - 18.66) climbed higher out of the gate, and closed with a gain of 2.6 points, or 16.1%, just shy of its intraday peak.
A Trader's Take :
"There isn't too much to be positive about," Bell lamented. "It seems as if the market is in a holding pattern with all the uncertainty out of Washington. Today, we saw a bit more selling, as it seems like the two sides are further apart than ever."
3 Things to Know About Today's Market :
- Debt ceiling negotiations dragged on today, as the House GOP offered up a plan to counter a deal being drawn up by the Senate, the latter of which would end the government shutdown and raise the debt ceiling until early 2014. After a closed-door meeting failed to generate enough support for the alternative plan, House Speaker John Boehner, R-Ohio, told reporters, "There are a lot of opinions about what direction to go. There have been no decisions about exactly what we will do." (Chicago Tribune)
- Elsewhere, Dallas Fed President Richard Fisher, known for his criticism of the central bank's quantitative easing measures, has resigned himself to the fact that a tapering of the Fed's bond-buying program is unlikely this month. With the Oct. 29-30 policy meeting rapidly approaching -- and the debt-ceiling drama in the spotlight -- Fisher stated, "My personal opinion is that it's not in play. This is just too tender a moment." (FOX Business)
- The Empire State business conditions index fell to a lower-than-expected 1.5 in October, compared to September's reading of 6.3. Adding insult to injury, the latest figure marks the smallest advance since the index fell in May. Breaking down the numbers even further, the new orders sub-index climbed to 7.8 from 2.4, while shipments dropped to 13.1 from 16.4. (MarketWatch)
5 Stocks We Were Watching Today :
- Tesla Motors (TSLA) scored a bullish brokerage note, after the auto concern significantly raised its unit expectations for 2017.
- Longer-term call buyers pounced on General Electric (GE) , as the company prepares to reveal quarterly earnings later this week.
- A closer look at eBay's (EBAY) sentiment backdrop reveals a bullish bias ahead of tomorrow's quarterly earnings report.
- Molycorp's ( MCP ) steep slide triggered a flurry of bearish options activity, as October put players wagered on extended losses.
- Front-month option bulls zeroed in on Facebook (FB) , after the security scored a price-target hike in pre-market action.
For a look at today's options movers and commodities activity, head to page 2.
Crude oil suffered its worst daily close since early July, as budget negotiations in Washington and easing concerns over Iran's nuclear program dragged prices lower. By the time the dust settled, the November contract shed $1.20, or 1.2%, to end at $101.21 per barrel.
Likewise, the debt ceiling standoff weighed on gold futures, as well, with the malleable metal closing lower for the fifth time in six days. December-dated gold fell $3.40, or 0.3%, to finish at $1,273.20 an ounce.