DJ30 PointChange: -66.45 Level: 11954.94 NASDAQ PointChange: -32.99 Level: 2579.27 NQ100 PercentChange: -1.0 R2K PercentChange: -2.1 SP400 PercentChange: -1.9 SP500 PointChange: -10.74 Level: 1225.73 NASDAQ-Adv:586 Dec: 1948 NYSE-Adv:857 Dec: 2171
The stock market was sporting an impressive gain in the early going, but
the confluence of technical resistance, another retreat by the euro,
and disappointment over the Fed's failure to give additional
consideration to further quantitative easing forced stocks lower.
Prior to the open market participants were dealt some underwhelming
retail sales numbers for November. Specifically, both total sales and
sales less autos increased by 0.2%, but total sales had been generally
expected to increase by 0.6%, while sales less autos had been generally
expected to post a 0.5% increase.
Big box electronics retailer Best Buy (BBY 23.79,
-4.28) issued another disappointing announcement for its third fiscal
quarter that featured an earnings miss. The stock would inevitably slump
for one of its worst performances of the past few years.
However, most traders were willing to look past such negative themes,
focusing rather on the cues that were coming from Europe. Renewed
buying interest there was partly credited to encouraging data from
Germany, but day-to-day shifts in sentiment have been a recurring theme
in recent months. Europe's major bourses would eventually slide.
Prior to Europe's pullback, stocks were able to build on their
opening gains because of rumors that the Fed might make more than mere
mention of the possibility of further quantitative easing. That took the
stock market to an early gain of about 1%, but the inability of the
S&P 500 to overcome technical resistance and a retreat by the euro
dashed those gains. The euro ended the day about 1.1% lower at $1.303,
which makes for its lowest level in 11 months.
Stocks found support at the flat line and even made a modest rebound,
but sellers soon redoubled their efforts upon receiving the latest FOMC
policy statement, which did not make any new mention of plans for
further quantitative easing, but recognized that strains in global
financial markets continue to pose significant downside risks to the
economic outlook. To little surprise, the Fed kept target interest rate
in the range of 0.00% to 0.25% and remained committed to extending the
average maturity of its holdings.
Given the uncertainty of the macro picture, many investors continue
to crave the safety of Treasuries, even with the yield on the benchmark
10-year Note at only 2.0%. Results from an auction of 10-year Notes
today showed dollar demand of $74.1 billion on a bid-to-cover of 3.53
and an indirect bidder participation rate of 61.9%. For comparison, an
average of the last six auctions gives dollar demand of $65.2 billion on
a bid-to-cover of 3.03 and an indirect bidder rate of 42.2%.
Advancing Sectors: Utilities +0.5%
Telecom -0.1%, Health Care -0.2%, Consumer Staples -0.3%, Energy -0.5%,
Tech -0.9%, Industrials -1.1%, Financials -1.5%, Materials -1.7%,
Consumer Discretionary -2.0%