If It’s Not Selling, Then What Is It?
With the
markets moving lower, one would think it is based on the action of selling
pressure. It’s not, but it is indicative of the unwillingness of
buyers to come back into the markets.
Traders are nervous for two major reasons:Â
- The increased odds of a global recession
and - The fear of another terrorist attack.
Stocks were under pressure Wednesday
on negative news, earning warnings and analyst downgrades. The markets’
bounce off the lows was short-lived. Volume was low on the NYSE as traders moved
into some safe-haven plays such as the drug, healthcare and biotech sector.
Volatility was also muted, as we did not see any major swings in the broad
market indexes.
One positive piece of news came out
during the day which may be a catalyst in moving the markets higher: The Bush
Administration is contemplating a corporate tax cut, which would be a key factor
in stimulating the economy. The current tax rate is 35% and may be cut to 30%,
based on a report in the Wall Street Journal. Or maybe the
old Wall Street adage “Sell Rosh Hashanah, buy Yom Kippur,” will
come true.
Breadth for the session was negative
with NYSE decliners leading advancers 1836 to 1312. Nasdaq decliners also
outpaced advancers 1948 to 1176.
The CBOE Volatility Index
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closed pretty much flat and the Nasdaq 100 Index
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As for the broader markets, the Nasdaq
Composite fell 2.5%, while the Dow Jones Industrials lost 1.0% as the market did
a two-steps-forward, one-step-back move. Pretty much par for the course as one
would expect for the current market environment.
Sectors moving up, the Gold and Silver
Index
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average.
The Pharmaceutical Index
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tacked on 2.3% as it pulls back off its lows in
what appears to be a multi-week inverted cup with the handle forming.
And the Healthcare Index
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moved up 0.9%.
Losing ground in the session, the
Semiconductor Index
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lows made three days ago.
The GSTI Internet Index
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closed lower 3.4%.
And the Interactive Week Internet
Index
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Individual gainers were Tyson Foods
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which tacked on 13.0%; Constellation Brands
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4.8%; while Partnerre Ltd
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On the Nasdaq, Bed Bath & Beyond
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shares climbed 9.2% after Goldman Sachs upgraded the company to
Recommended List from Market Outperform.
Express Scripts
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5.5%.
Advance PCS
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7.0%.
Losing ground for the day: AES
Corp
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warning.
Winn Dixie Stores
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were hammered, closing down 37.2% after issuing an earnings warnings and being
downgraded by a couple of analysts.
And Textron
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the company warned that it sees a loss of 25 cents a share for Q3. Consensus
estimates according to Multex was for a profit of 71 cents.
Smartforce PLC
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Micron Technologies
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lower 18.7% after Bear Stearns downgraded the company from Buy to Attractive.