With the DOW falling 58 points today, it was the sixth decline for the DOW out of the past seven sessions. Investors might be seeing a topping process now in place after the tremendous move higher in the post-election time period. The NASDAQ was lower for the second time in three days with a loss of 35 points at the closing bell. The S&P 500 joined the descending club today by dropping 6.
This does not mean that the overall market was terrible. The DOW had some nice gainers today like AAPL, HD, PG, NKE and WMT. On the other hand, the big losers were the financials…especially those that did well on Friday after their earnings…including JPM, MS, BAC, C, and WFC. To make the financial rout complete, DOW component GS, which reports tomorrow morning, shed 3.5% of its value today by losing 8 points. UNH, another DOW component, was lower today after what appeared to be a very good earnings report. UNH was one of the best DOW performers last year, so perhaps this is a case of the old “buy the rumor, sell the news” syndrome.
As a result of this mixed performance, breadth numbers were about even today…but the VIX gained 5% to 11.87.
Bond yields were lower with the 10-year Treasury Note down to 2.32%. This obviously hurt the financial stocks as the dollar weakened to an eight-week low due to further comments from the president-elect that it is too high. The result was a Euro that went up to 1.07 and the Japanese yen was higher at 113.6 to the dollar. Gold is up to $1,215 an ounce, its highest point in two months. Crude oil was up to $53.32 a barrel.
This will be another dynamic week for earnings. Here is the schedule: DOW Transport component CSX reports tonight; Wednesday – GS plus C and high-flying NFLX; Thursday- DOW components AXP and IBM; Friday – GE plus SLB.
Donald M. Selkin
These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the Author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide our customers with timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.