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[BRIEFING.COM] The major market averages recovered from some early selling pressure to trade with gains of roughly 1% for most of the day, but the stock market's failure to extend its gains in the face of resistance provided participants with an excuse to exit their positions, causing stocks to roll over into the close.
Stocks opened in positive territory as participants took their cues from renewed buying interest in Europe, where news that Italy's debt was downgraded came without surprise given speculation last week. An early slip by financials prompted some knee-jerk selling, but stocks were able to stabilize quickly and mount an impressive bounce that took the Dow more than 100 points higher and the S&P 500 to a gain of more than 1%.
However, momentum stalled when the S&P 500 approached the 1220 line. It traded between there and 1215 for more than three hours before sentiment soured and participants, partly seeking the path of least resistance, resorted to selling. The decision to sell also precedes the latest FOMC policy statement, which will be released tomorrow afternoon. The past couple of statements have featured verbiage regarding the Fed's vigilance and readiness to use its policy tools if conditions should permit, but nothing has been let on about new plans to help stimulate the economy.
Also of primary concern is the ability of European officials to contain Greece's financial troubles, so as to help prevent contagion. However, participants never got any updates on the progress of Greece's dealings with the Troika. CNBC did report before the close that officials from the Troika will return to Athens in October, though.
The Dow managed to make it out with an marginal gain, but the S&P 500 logged a loss. Of the three major equity averages, the Nasdaq suffered the worst fate. Aggressive selling sent it to a loss of nearly 1% after it had been up about 1% at its session high. Oracle (ORCL 28.35, -0.67) proved to be a heavy drag ahead of its quarterly report.
Small-cap and mid-cap stocks were hit hard as participants moved to pare risk. That left the S&P 400 to fall to a loss of more than 1%, while the Russell 2000 tumbled to a loss of almost 2%.
Cyclical plays like materials (-1.0%), industrials (-0.7%), energy (-0.6%), and consumer discretionary stocks (-0.6%) finished the day with the worst results. In contrast, defensive-oriented utilities were the top performers for the entire session. They settled with a 1.4% gain after the group had been up in excess of 2% at its session high. Midsession strength among utilities helped the Dow Jones Utility Index climb to its highest level in nearly three years.
Advancing Sectors: Utilities (+1.4%), Health Care (+0.9%), Telecom (+0.5%), Consumer Staples (+0.1%)
Declining Sectors: Materials (-1.0%), Industrials (-0.7%), Energy (-0.6%), Consumer Discretionary (-0.6%), Tech (-0.4%), Financials (-0.3%)