Blame North Korea, blame higher oil prices, blame North Korea, blame Iran, blame the ADP payroll report and then blame North Korea some more. It doesn’t matter - stocks and bonds were both hurt today, and many commodities moved higher.
The Dow Industrials dropped 76 points (-0.7%) to 11152, the S&P 500 fell 9 points (-0.7%) to 1271 and the Nasdaq showed particular weakness, dumping 37 points (-1.7%) to 2153. The Russell 2000 lost 11 points (-1.5%) to 720. The Dow Transports fell 1.1% and the Utilities lost 0.7%. Bonds were lower except at the very short end of the very-messed-up curve, and yields moved higher: 6-month 5.30%, 2-year 5.23%, 5-year 5.18%, 10-year 5.22% and 30-year 5.27%.
Market internals finished well in the red, but were much worse early in the day. Volume came well up off of Monday’s very low levels, but still came in below recent averages. Advances/declines were about 5 to 14 on the NYSE and 3 to 7 on the Nasdaq, with up/down volume 5 to 14 on the NYSE and 1 to 7 on the Nasdaq. New highs/lows were 71/83 on the NYSE and 67/64 on the Nasdaq.
I’ll look at the groups as best I can, given that the PHLX indices are still having trouble. There were almost no winners - the oil stocks managed a 0.3% gain. The losers were plentiful, with semiconductors getting hit for about 2.7%, followed by transports (-2.6%), networkers (-2.1%), internets (-2.1%), steel stocks (-2.1%), homebuilders (-1.9%), disk drives (-1.8%), software (-1.8%), brokers (-1.5%), telecoms (-1.5%), and computer hardware (-1.5%).
Energy prices were mixed - big moves higher in crude oil and gasoline, lower in nat gas. Crude set a new record high closing level of $75.19/barrel, and gasoline bumped back up to $2.28/gallon, but natural gas fell to $5.77/mmBTU. The dollar got a boost this morning, and the dollar index moved up to 85.61. Gold and silver both moved higher, gold to $629/ounce and silver to $11.39/ounce.
BMB Note: I was willing to give the market the benefit of the doubt early on, thinking it might bounce back a bit after the initial reaction to the North Korea situation was out of the way. But the weakness prevailed, and doesn’t leave me feeling all that great about this market’s chances right now. Pretty shaky.
Maybe this pullback will provide some opportunities on the long side - assuming this little ‘rally’ still has any steam left after today - but I’ll be careful about what areas to probe, and will likely be looking for possibilities in the energy/commodity areas. Tech remains weak, and we’re seeing continued breakdown in things like retail - and there will be loads of retail numbers coming out throughout the day tomorrow.
Still a pretty shaky market, one that looks like it will remain choppy. That means you might be able to make a little money on both the long and short side, if you stick to the right areas — or you might not be able to make much money at all on either side. Just not a lot of momentum in stocks right now.
Plenty of momentum in some of the commodities at the moment though. Playing the May/June dip in oil via the USO has turned out to be a profitable move. Crude looks to have broken out of its recent ‘flag’ pattern, and could easily move to new record highs. The precious metals are strong, but have gotten a little extended, so I’ll be looking for pullbacks in that area.