Slaughter on Wall Street

Stocks were once more sliced, diced and dissected by nervous investors as the Dow Jones Industrials dipped to their lowest levels since mid-March.

The NASDAQ and S&P 500 indices also were off sharply, also approaching recent lows. The NASDAQ reached a short-term low of 2,177 on March 17. The S&P bottomed out on March 10, at 1273.37.

We are witnessing the beginning of another downward thrust in the markets as the high price of oil and slumping economies begin to impact stocks in real, tangible ways.

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Also in front of investors is the possibility that the Fed is through cutting interest rates for the time being. Following a series of cuts which began in August of last year, the Fed continues - through speeches by members - to express serious inflation concerns, which are normally fought through higher, not lower, interest rates.

Dow 12,083.77 -205.99; NASDAQ 2,394.01 -54.93; S&P 500 1,335.49 -22.95; NYSE Composite 8,941.27 -125.83

As for market internals, today was one of the worst this year, which is saying quite a bit. Declining issues outpaced advancers by a nearly 4-1 margin, 4974-1332. New lows swamped new highs, 495-72. Once more, the margin between the new highs and lows is elevated and had signaled this decline.

It doesn't take as stock market genius to see where this is headed. Anyone with any experience in markets knows that the March and January lows will be retested before any advance can occur. I've been saying this since late April (maybe even sooner) and it appears to be happening as predicted.

How low the markets actually descend depends largely upon second quarter earnings reports which will be hitting analysts' desks beginning about a month from now and carrying the trading bias through the last two weeks of July and most of August.

Two schools of thought apply. Either the bottom is achieved prior to the upcoming earnings season or the corporate reports cause further erosion. It is too early to tell, but, up until now, outside of financial stocks, companies have not been hard hit by the slowing US economy.

Oil was back up again, gaining $5.07, to $136.38. Gold rebounded somewhat, up $11.70, to $882.70. Silver tagged on gains of 22 cents, closing at $16.86.

The temporary rebound for commodities is still no cause for alarm. If the Fed is serious about raising, or at least not cutting, rates, that should serve to strengthen prospects for the dollar against other currencies. The Fed's next meeting is in two weeks, on June 24-25. A strong policy statement could seal the fate of most commodities (even oil, think of that!), fomenting a sell-off in most key traded markets.

NYSE Volume 1,386,098,000
NASDAQ Volume 2,100,234,000