The trend has been lower for three straight sessions, with the Dow losing somewhere in the vicinity of 100 points a day. Catalysts for the declines are various and diverse, from poor US data - the Richmond Fed manufacturing index came in at -17 on expectations of -1, the lowest level since April 2009 - concerns over the Spanish government needing a bailout, or Moody's lowering the outlooks for Germany, the Netherlands and Luxembourg to negative late Monday.
Even China got some play as their flash PMI number rose to the best level in five months, though at 49.5, still showed contraction. The blip from the Far East was seen as a positive, though more than likely, a minor one, as one month's data surely does not make a trend and data from China is widely regarded as highly unreliable.
In Europe, most of the stock indices took losses, though not as heavily as on Monday. The mood on the continent is extremely guarded, as yields on benchmark 10-year notes in Spain and Italy have hovered around or exceeded the 7% mark.
Here in the states, the 10-year yield continues to fall, as predicted by Paul Craig Roberts and other astute economists (see yesterday's post), to a record low yield of 1.39, while the 30-year bond closed at 2.46, also a record low.
Market conditions and sentiment appear to be quickly worsening, with the advance-decline line negative for three straight days and the new highs - new lows metric having reversed to negative on Monday and continuing to worsen with Tuesday's session.
Commodities were mostly lower, with the notable exception of oil, which continues to be boosted by ongoing uncertainty over Iran, though the corn and soybean futures markets were notably nixed, as slack demand seems to be trumping even the effect of the worst drought since the 1950s.
All of the data and market moves seem to be pointing toward Friday's initial reading of second quarter GDP, slated for release at 8:30 am EDT on Friday. Forecasts range from 0.3% to 1.7% growth, though estimates have been coming down from a variety of sources in recent days and third quarter and second half GDP outlooks have been routinely revised lower.
As it turns out, however, the biggest news of the day came may have come after the markets had already closed, when Apple (APPL) reported a fiscal third quarter earnings miss that sent the stock markedly lower.
From the LA Times:
The technology giant said profit rose 21% to $8.8 billion, or $9.32 per share, on revenue of $35 billion, up 22% from a year earlier. The results were less than what analysts had expected. Shares plummeted in after-hours trading, falling $34, or nearly 6%, to $566.78.
Analysts surveyed by Thomson Reuters had estimated that Apple would post earnings per share of $10.36 on revenue of $37.2 billion. A year earlier, the Cupertino, Calif., technology behemoth reported record quarterly revenue of $28.6 billion and record profit of $7.3 billion, or $7.79 a share. That was a 121% increase over its third-quarter 2010 earnings per share.
If Apple, the bellwether for all tech stocks and a major component of the S&P 500 and NASDAQ 100, cannot beat lowered expectations, then perhaps the idea that a global deflationary slowdown is well underway might finally dawn on not ony the wizards of Wall Street but the average Joe and Jane Sixpacks, who likely already have gotten the memo, having not enough income to afford an iPad or iPhone, essentially spending whatever income they have on survival items like food and fuel.
Good grief! Can it get any worse?
We already know the answer to that.
Dow 12,617.32, -104.14 (0.82%)
NASDAQ 2,862.99, -27.16 (0.94%)
S&P 500 1,338.31, -12.21 (0.90%)
NYSE Composite 7,590.61, -79.92 (1.04%)
NASDAQ Volume 1,735,519,125.00
NYSE Volume 3,853,596,750
Combined NYSE & NASDAQ Advance - Decline: 1484-4064
Combined NYSE & NASDAQ New highs - New lows: 118-210
WTI crude oil: 88.50, +0.36
Gold: 1,576.20, -1.20
Silver: 26.81, -0.23
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