Stocks Knocked; Techs Under Pressure; Oil Skid Continues; New Home Sales Drop 18 Percent

Even as longer duration bond yields fell, there wasn't much to wrap a trade around Tuesday sending the major averages slipping into the red across the board.

Yields on the 10-year note and 30-year bond were 1.63% and 2.34%, respectively, each down 11 basis points over the two sessions from Friday’s close.

After stocks vacillated across the unchanged line with slim gains through most of the morning, non-committal waves of selling began to appear in the afternoon, accelerating into the close.

For the Dow Jones Industrials and S&P 500, it was the third losing session in the last four. The NYSE Composite Index fell for a fourth straight day while the NASDAQ was a loser for the second time in the last four, trading in a resistance range just below its 50-day moving average, a level its found hard to shake free from for the past month after falling off from all-time highs.

Part of the problem for stocks is the uncertainty of economic recovery in the developed European nations and the United States. While America seeks to rebound with states reopening to business as usual, Germany, France, Italy, and the UK continue to be beset by a third wave of the neve-ending virus that has battered economies for the past year. Travel restrictions, mask mandates, and all manner of social distancing disorder have become the norm in the the four biggest European economies.

Such discomfiture sent oil futures to six-week lows, well off the 11-month highs made two weeks ago. WTI crude oil closed at $57.76 a barrel, down $3.69 from Monday's finish at $61.55 a punishing five percent decline, an indication that if economic recovery is going to occur at all, it will be in fits and starts, with many surprises and setbacks along the way.

As cliche as it sounds, markets are not appreciative of uncertainty, the displeasure becoming manifest in recent days, even as stimulus checks are rolling out in the USA with estimates of as much as 20% of the individual $1400 booty earmarked for stock trading.

That retail buyers would end up eventual bag-holders would not be surprising given that stocks have been highly-valued for months, if not years. A wash out correction led by tech stocks which have already been hard hit could be days or weeks away.

More optimistic analysts predict equities to continue rising as economic data indicates an improving condition, but positive data has been scant of late. Monday's Existing Home Sales for February from the National Association of Realtors showed a 6.6% monthly decline, although home prices remained at astronomical levels, rising to a record of $313,000 for the median-priced home, 15.8% higher from one year ago.

At best, recent data drops have been a mixed blessing. Tuesday's new home sales 2:00 pm ET release was the likely culprit for the stock selloff, as it showed a decline of 18.2% in February. Taking the worst of it were Midwest builders, where sales were off a whopping 37.5% month-over-month, the data skewed by unusually harsh weather conditions.

All of these shifting winds have Wall Street in a tight spot, making for tough trading while calling for deeper analysis. For now, until there is more directional clarity, it appears the economy is still operating at close to stall speed and stocks should respond as they have been for the past month, sideways to slightly down. Desire for more positive news is growing, though it has not yet reached the desperation stage.

Thursday's final estimate of 2020 fourth quarter and year-end US GDP should be the capper for the week. Expectations are for the quarterly figure to come in at 4.1%, in line with the second estimate from February.

(Post 3002)

At the Close, Tuesday, March 23, 2021:
Dow: 32,423.15, -308.05 (-0.94%)
NASDAQ: 13,227.70, -149.84 (-1.12%)
S&P 500: 3,910.52, -30.07 (-0.76%)
NYSE: 15,346.53, -205.05 (-1.32%)