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Overseas Tension Trumps Domestic Data; Dow Sinks 231 Points

By: Schaeffer's Investment Research
Posted: 3/13/2014 4:21:00 PM
Referenced Stocks: TSLA;INTC;MGM;IGT;AMZN

"There seems to be a real trend toward reducing risk in the market right now, as more and more uncertainty surrounds the Ukraine situation and China's economic growth outlook," noted Schaeffer's Senior Equity Analyst Joe Bell, CMT. "In a natural rotation, we are seeing investors trade out of U.S. equities while cash flow moves into gold and bonds." The Dow Jones Industrial Average (DJI) moved higher out of the gate, but was quick to tumble into negative territory, closing with a triple-digit loss and all of its components in the red. It marked the fourth consecutive decline for the blue-chip index.

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

Trading Topic of the Week -- How to Interpret Short Interest: Eye the stock's price action . By considering the stock's performance, you can determine the bears' motivations -- and see whether they've been on the right side of the trend in the past.

The Dow Jones Industrial Average (DJI - 16,108.89) started the session above breakeven, but spiraled lower as the day wore on, closing with a substantial loss of 231 points, or 1.4%. All of the Dow's 30 members moved lower on the day, though The Procter & Gamble Company (PG) and AT&T Inc. (T) were least affected, each shedding less than 0.1%. Bringing up the rear was Pfizer Inc. (PFE), down 2.7%.

The S&P 500 Index (SPX - 1,846.34) breached the significant 1,850 mark, closing off 21.9 points, or 1.2%. The Nasdaq Composite (COMP - 4,260.42) was sharply lower on the day as well, down 62.9 points, or 1.5%.

The CBOE Volatility Index (VIX - 16.22) spiked amid the sell-off, adding 12.1%, or 1.8 points. The "fear barometer" had not traded north of 16 since March 3.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Despite today's poor price action, the U.S. markets actually received a pretty good retail sales number and jobless claims report this morning," added Bell. "Both perhaps support the theory that the winter weather was actually to blame for economic weakness in recent months. But despite the upbeat reports, the global concerns have been dominating the spotlight in recent days."

5 Items on Our Radar Today :

  1. Despite continued polar temperatures, U.S. retail sales managed to increase 0.3% last month. This marked the first increase in the figure since November, and narrowly exceeded economists' expectations. The reading for January, however, was revised slightly lower to reflect a drop of 0.6%. (USA Today)
  2. Jobless claims declined by 9,000 in the week ended March 8, hitting a three-month low of 315,000. Economists were expecting the number of claims to rise in the latest reporting period. Elsewhere, business inventories rose 0.4% in January, in line with expectations, but business sales saw a 0.9% slump, which may have partially been due to weather-related challenges. (Bloomberg; Reuters)
  3. President Barack Obama's three choices for the Federal Reserve board of governors sat before Senate Banking Committee members today. The committee must approve the appointment of Stanley Fischer, Lael Brainard, and Jerome Powell before the full Senate holds a vote. (AP, via ABC News)
  4. News on the Prime membership front spurred Amazon.com, Inc. ( AMZN ) short-term call buyers into action, as traders scooped up weekly calls.
  5. Electronic Arts Inc. (EA) was the object of conflicting brokerage opinions today, scoring both a downgrade and a price-target hike.

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 :

Oil futures edged higher today after spending three days in the red. By the close, April-dated futures had settled 21 cents higher, adding 0.2% to finish at $98.20 per barrel.

Gold futures continued to gain ground, as a sharp pullback in the equities market enhanced the yellow metal's safe-haven appeal. The April-dated contract added $1.90, or 0.1%, to close at $1,372.40 per ounce, notching its fourth consecutive advance.

SCHAEFFER'S MARKET POSTURE