Great Wall Of Worry
Worries about earnings, interest rates, hard landings, and analyst downgrades
all combined to drive buyers away from stocks Wednesday, as semiconductors and
banks led a broad selloff that took the Dow down 1.7%, the S&P 500 down
1.5%, and the Nasdaq down 1.0%. Several traders commented that bids remained
light as buyers stayed on the sidelines.
What some traders noted was the fact that NYSE volume increased to 1.18
billion shares, which was about 15% above Tuesday’s level while Nasdaq volume
also increased to 1.67 billion, which topped Tuesday’s level by about 12%. Some
of the volume increase, though, was attributed to S&P 500 index
rebalancing.
"During the last few days there’s been no rhyme or reason. It’s just
been directionless on the downside and just not a pretty tape. There’s really no
reason for anybody to be involved on the buy side here, and it’s just been a
very, very difficult market," said Jay Suskind, Director of Trading, Ryan
Beck & Co.
"I really don’t sense that much of a change here. There’s no catalyst
out there to be having the market moving on the upside. Whether it’s a question
of earnings for the third or fourth quarter, or whether it’s soft landing versus
hard landing, there’s just no conviction or momentum out there," he added.
According to preliminary numbers, the Dow sank 183.49 to 10,516.48, the
Nasdaq fell 41.74 to 3987.83, and the S&P 500 lost 22.04 to 1452.43.
Top sectors included oil services
(
$OSX.X |
Quote |
Chart |
News |
PowerRating), up 2.6%, insurance
(
$IUX.X |
Quote |
Chart |
News |
PowerRating),
up 1.9%, and gold and silver
(
$XAU.X |
Quote |
Chart |
News |
PowerRating), up 1.6%.
On the downside were telecom
(
$XTC.X |
Quote |
Chart |
News |
PowerRating), down 2.2%, banks
(
$BKX.X |
Quote |
Chart |
News |
PowerRating),
down 2.7%, and semiconductors
(
$SOX.X |
Quote |
Chart |
News |
PowerRating), down 6.3%.
Optical network giant JDS Uniphase
(
JDSU |
Quote |
Chart |
News |
PowerRating) was added to the S&P 500
at today’s close, and like so many recent S&P 500 additions, it jumped 5
13/16 to 136.
In the biotech space, one standout was Aurora Biosciences
(
ABSC |
Quote |
Chart |
News |
PowerRating) which
rose 6 7/8 to 88 after Merck validated one of Aurora’s biotech screening
products.
Dow stocks under pressure included JP Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), down 3.5%, Hineywell
(
HON |
Quote |
Chart |
News |
PowerRating), down 4.2%, International Paper
(
IP |
Quote |
Chart |
News |
PowerRating), down 4.6%, Hewlett Packard
(
HWP |
Quote |
Chart |
News |
PowerRating),
down 4.7%, and AT&T
(
T |
Quote |
Chart |
News |
PowerRating), down 5.1%. Dow winners included McDonalds
(
MCD |
Quote |
Chart |
News |
PowerRating),
up 5.1% and du Pont
(
DD |
Quote |
Chart |
News |
PowerRating), up 3.0%.
Chips sinking the SOX were LSI Logic
(
LSI |
Quote |
Chart |
News |
PowerRating), down 19%, Rambus
(
RMBS |
Quote |
Chart |
News |
PowerRating),
down 11%, Novellus
(
NVLS |
Quote |
Chart |
News |
PowerRating), down 10%, and Altera
(
ALTR |
Quote |
Chart |
News |
PowerRating), down 10%.
"The market today is continuing to follow a trend that we have seen
really over the last week or so, where there remains a lot of ambiguity
concerning growth, i.e. technology stocks," said Brian Belski, Fundamental
Market Strategist, U.S. Bancorp/Piper Jaffray.
"I think that lack of visibility, at least on a near-term basis, in
terms of continued momentum with earnings has people a little shook up. We’ve
also had some new question marks regarding the interest rate scenario going
forward, but it is my contention that I think we are done seeing rate
hikes," he added.
Looking ahead, the Employment Cost Index and the June durable goods orders will be released
on Thursday at 8:30 AM ET. Analysts look for a 1.0% rise in employment costs and a 0.5% increase in durable goods orders.