Just a miserable day for stocks. It seems like we haven’t seen a day like this for quite some time (down almost 2% in the major market averages). I don’t believe that straws, like the numerous global concerns and a default of Argentina, are the ones that “broke the camel’s back” in this market today. I think the thought of the Fed actually raising rates sooner than later has market participants on edge. The double edge sword of good economic data is creating the classic good news is bad news scenario. Remember, the battle cry of this market advance since 2009 has been “don’t fight the Fed”. We mentioned a couple of quarterly reports ago, that the time would come when the Fed will change from a tail wind to a head wind. I am not sure that time is right this minute, but the more good economic news we get (like 4% GDP numbers), the likelier it is that the Fed will begin to change course. Despite the logic that an improving economy will be good for stocks long term, the loss of the Fed’s punch bowl was going to be a short term challenge for stocks. Perhaps that is beginning to play out. The jobs number tomorrow, seems now to carry even more weight.
Anyway, as for today’s trading, the Dow Jones Industrial Average was down 316 points to close at 16,563. The S&P 500 was down 39 points to finish the day at 1930. Gold was down $11 to trade at $1285 per ounce, while oil was down $2.29 to trade at $97.98 per barrel WTI. A major support level around 1950 was taken out today in the S&P, so we’ll be watching to see if the bulls can recapture that, or will the bears force the action.
As I said, tomorrow’s jobs report should be very interesting. Even more interesting will be the market’s reaction if it is good news. It looks like corporate earnings have been put on the back burner for the moment. Let’s see how tomorrow plays out.
Have a nice evening everyone.