SPX Tags 4-Year Best Before Closing in the Red
The Dow Jones Industrial Average (DJI) was up 59 points before lunchtime yesterday, but as the day wore on, the downtrend only steepened.
“Although the market erased early gains and finished in the red, traders continue to wait for the Federal Reserve’s annual summit in Jackson Hole, beginning August 30,” noted Schaeffer’s Senior Equities Analyst Joe Bell. ” Apple Inc. ( AAPL ) took the spotlight earlier today, as it reversed its rally and dragged the tech sector down with it.”
The Dow Jones Industrial Average (DJI – 13,203.58) began its decent in the late-morning hours yesterday, and drifted more than 85 points to its intraday low of 13,186.60. By the time the dust cleared, the Dow turned in a 68.1-point, or 0.5%, defeat.
All but eight of the 30 blue chips slipped into negative territory, as Verizon Communications Inc. ( VZ ) and Merck & Co., Inc. ( MRK ) led the underperforming majority with matching losses of 1.9%. Meanwhile, JPMorgan Chase & Co. ( JPM ) paced winning issues with a 1.8% rise.
Similarly, the S&P 500 Index SPX – 1,413.17) and Nasdaq Composite (COMP – 3,067.26) also erased early gains and finished lower on the day. The SPX fell from its session best of 1,426.68 — its loftiest price since May 2008 — and closed trading with a roughly 5-point, or 0.4%, deficit. The tech-rich COMP sawed off nearly 9 points, or 0.3%.
The CBOE Market Volatility Index (VIX – 15.02) notched its second consecutive gain, advancing 7.1%. The VIX also settled above 15 for the first time since August 9.
“Small caps continued to lead today, a trend we have started to see pick back up in August,” said Bell. “After months of underperformance, a resurgence from this group could bode well for the overall market.”
Oil futures closed in the green, as euro-zone optimism lifted the euro to its best price since early July. While the dollar weakened, the commodity finished at its loftiest settlement in three months. Against this backdrop, the now-expired September-dated contract added 71 cents, or 0.7%, to end at $96.68 a barrel. Crude for October delivery — the new front-month contract — gained 58 cents, or 0.6%, to close at $96.84 a barrel.
Likewise, gold futures finished higher, prolonging their winning streak to five sessions. The commodity was supported by hopes that economic stimulus for the euro zone will be implemented by the European Central Bank. By the close, December-dated gold jumped $19.90, or 1.2%, to land at $1,642.90 an ounce. This marked the malleable metal’s highest perch since May 4.