Stocks Taken Down Again

For the second straight day, US equities were hammered down as investors continue to express negative sentiment by selling en masse.

Following the release of poor quarterly results by FedEx (FDX, 82.60, -1.73) and Morgan Stanley (MS, 40.69, -0.10) traders quickly sent stocks into negative territory where they spent the remainder of the session.

Dow 12,029.06 -131.24; NASDAQ 2,429.71 -28.02; S&P 500 1,337.81 -13.12; NYSE Composite 8,999.56 -74.85

The Dow closed less than 300 points above the March 10 lows (11,740) which marked a 16-month bottom. Other indices are heading in the same direction.

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Declining issues ran well ahead of advancers, 4294-1690. New lows outdid new highs, 469-129.

Once again, financial issues were the main drag on stocks, though 11 of 12 sectors were lower. Only Basic Materials showed a gain over the course of the session.

Despite the obvious impetus to sell, volume overall was again sluggish.

Crude oil for August delivery gained $2.37 to $136.90. Gold finished $6.60 higher, at $893.50. Silver gained as well, up 27 cents to $17.34.

NYSE Volume 1,282,983,000
NASDAQ Volume 2,060,739,000

Stocks Drop on Low Volume

The inevitable has occurred on Wall Street. Investors, like many other hip, urbane global citizens have figured out that US equities are not the only game on Wall Street, or Fleet Street or in Shanghai, Tokyo, Stockholm, Bombay or any other financial center.

Thus, when the US economy appears shaky, investors look elsewhere. There are stock markets and exchanges everywhere. It's one of the effects of globalization. One of the unintended consequences, to be sure, for Americans, but it is there, and it could be devastating.

On a level playing field, American companies compete with those from China, India, Europe, the Middle East, South America, Australia and everywhere else capital and public companies can be found, which, these days, is just about anywhere on the planet.

Dow 12,160.30 -108.78; NASDAQ 2,457.73 -17.05; S&P 500 1,350.93 -9.21; NYSE Composite 9,074.41 -13.47

With summer on the rise, volume on the US exchanges is usually lower, though this season seems even less vigorous than usual. It's been weeks of sub-par volume on the NYSE and NASDAQ with no end in sight. Today, investors were selling, and it didn't take much to push stocks back to their lowest levels since March.

Adding to investor concerns were today's PPI results from May, which showed producer prices increasing at a 1.4% clip, though this marked jump was almost all attributable to gains in fuel and food, as the core rate increased only 0.2% for the month.

Housing starts fell to their lowest level since 1991, at 975,000 units, which, though more of the same old news, was still an unwelcome reminder that one of the great asset classes was still skidding downhill.

Even more important, though sparsely reported by the bulk of the established economic press, were capacity utilization which fell to 79.4% in May, from 79.6% in the prior month, and industrial production, which notched a -0.2% figure over the same period, adding to the -0.7 drop in April.

Both of these numbers border on dismal. Optimally, capacity utilization should be above 94% and industrial production should be rising, not falling. These are both ominous signs of the considerable risk of recession, or, further proof that the US economy is already receding.

Advancing issues were overwhelmed by decliners, 3647-2327. New lows once again scored past new highs, 189-153, though the majority of the new lows came from the NASDAQ.

Oil fell by 81 cents, to $134.53. Gold was up marginally as well, gaining 60 cents to $886.90. Silver advanced 16 cents to $17.08 the ounce.

For the second consecutive session, the lack of volume was the leading story.

NYSE Volume 1,093,504,000
NASDAQ Volume 1,830,339,000

Stocks Mostly Gain; Dow Lower

US equities took divergent paths on Monday, as the NASDAQ finished higher, the Dow lower, and the S&P 500 mostly unchanged.

Dow 12,269.08 -38.27; NASDAQ 2,474.78 +20.28; S&P 500 1,360.14 +0.11; NYSE Composite 9,087.88 +24.65

Once again, there was little in the way of real economic news to move markets and that was reflected in the sparse volume and slow pace of trade.

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Advancing issues outdid decliners by a healthy margin, 3743-2468. New lows continued to dominate new highs, however, 244-150.

This rather sluggish trading should continue through the end of the month at least, in advance of 2nd quarter earnings reports in the middle and latter part of July. There certainly aren't many bargain stocks - at least on a marginal valuation scale - prompting investors to sit and wait until some kind of catalyst offers some kind of direction to the market.

The Fed, which meets next week, is widely speculated to hold interest rates right where they are, with federal funds at 2%. That leaves Bernanke and Co. very little wiggle room to cut, though there's plenty of room to raise rates should inflation become more of a worry.

The good news is that inflation seems to be quite well contained for a change, but economic expansion is being put on hold, due mostly to high oil and gas prices.

Speaking of crude, it was up early, but actually finished 13 cents lower, at $135.34. Reports are circulating far and wide that Saudi Arabia, the world's largest producer of crude oil, intends to increase output by 200,000 barrels a day, in a move that ostensibly would do away with runaway, rampant price hikes seen of late.

Gold finished sharply higher, at $886.30, up $13.20. Silver also followed suit, gaining 67 cents to $17.23. Both metals are still in a trading range well off their highs, set earlier this year. Should oil prices become more contained, a strengthened dollar and renewed economic expansion in the US could defuse the long-run metals and wider commodity rallies. Some relief from high commodity prices would be a welcome relief for both goods producers and consumers alike.

With the credit markets still in a state of near-siezure, stable to lower prices would be a very good sign that the "recession" or slowdown would be nearing a bottom. The truth is that we may have entered a real recession in December of '07, and the end could easily be marked about the time of the presidential elections at the start of November.

Wishful thinking for a better tomorrow.

NYSE Volume 1,163,712,000
NASDAQ Volume 1,862,187,000

Stocks End Rough Week With Mixed Results

With volatility firmly back in place, on Friday, investors felt safe establishing positions to hold over the weekend. Stocks had been buffeted about by alternating winds of change during a somewhat tumultuous week, but ended higher on the day, but mixed for the week.

This, after a near-400-point drubbing of the Dow just one week ago.

Dow 12,307.35 +165.77; NASDAQ 2,454.50 +50.15; S&P 500 1,360.03 +20.16; NYSE Composite 9,063.23 +115.50

The Dow Jones Industrials finished the week higher by 97 points, but it was the only major index to record gains. For the week, the NASDAQ was down 20 points, the S&P lost 0.65 and the NYSE Composite ended 89 points lower.

Obviously, there was more work for stocks to do before anyone would say this is a true sustainable rally or that any progress had been made vis-a-vis the economy.

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Investors were encouraged by news that the CPI was up only 0.6% in May, with core inflation - excluding food and energy - only 0.2% higher. While those figures may be of some relief to traders, they still indicate an economy dealing with 7.2% annual inflation, though somewhat tempered in that most of it is coming from the obscene rise in the price of crude oil and motor fuel.

On the session, advancing issues finished well ahead of decliners, 4474-1786, though new lows continued to outperform new highs, 330-96, a persistent, troubling trend.

Oil actually lost some ground heading into the weekend, losing $1.91, to $135.47. Gold finished ahead marginally, up $1.10, at $873.10. Silver also posted minor gains, up 8 cents, to $16.56.

Consumer sentiment was markedly lower, with the University of Michigan June survey checking in at 56.7, from 59.8 in May, the lowest level since 1980.

The mixed results on Wall Street are indicative of contentious times for investors. There still needs to be a complete flushing of weak hands before any substantive move forward is warranted.

On the inflation front, the Fed may be convinced that it's time to tighten the credit spigot a bit to keep prices from spiraling out of control. By merely standing pat, or even raising rates 25 basis points, the markets would surely get the message. Such a move at the June 24-25 meeting would be a very stabilizing influence on markets and a strengthening motivation for the US dollar.

Volume on US equity exchanges was moderately lower than the 4-week average.

NYSE Volume 1,224,933,000
NASDAQ Volume 2,113,058,000

Early Rally Fizzles, PPT Steps in to Save Markets

We knew (didn't we?) that after the deep declines Wednesday and last Friday, there would be plenty of bottom-fishing, and this morning, stocks were up sharply. The Dow was higher by nearly 200 points between 11:00 am and noon, but the realities of the market brought fresh waves of selling throughout the afternoon.

Shortly after 3:00 pm, the Dow had sunk back to break-even, with all other indices showing in the red. It was at that point, with markets apparently breaking down badly, that stocks began moving forward again, a sure sign that the Plunge Protection Team (PPT) was back at work, salvaging what little is left of the formerly free and fair equity markets.

Dow 12,141.58 +57.81; NASDAQ 2,404.35 +10.34; S&P 500 1,339.87 +4.38; NYSE Composite 8,947.72 +6.45

As usual, on days such as this, the internals offer a better view of what's really going on. Advancing issues actually fared better than decliners on the day, though by a very slim margin, 3208-2833. New lows continued to dominate new highs, 367-73. These numbers continue to confirm that stocks are stuck in a near-term down trend that isn't likely to end until recent lows (March) are retested.

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That the PPT (correctly known as the President's Working Group on Financial Markets) would enter into the fray is completely expected. As a matter of conjecture, they've probably been plying their trade with due diligence over the past few months, attempting to stabilize some truly upsetting conditions which persist in US markets.

Markets received a bit of good news in terms of retail sales figures this morning, but those were quickly dismissed as a natural outgrowth of the millions of government stimulus checks which were finding taxpayers. The fundamentals of a weak economy, with inflation, low job creation and a crumbling currency, are still in place and have not improved.

Oil was up again, gaining 40 cents, after being lower most of the day, settling at the unsettling price of $137.38. Metals were once more under pressure, with gold losing $10.90, to $872.00, and silver dropping 37 cents to $16.49 an ounce.

Traders are largely running scared at this juncture and until there is clear evidence of some positive changes in the economy, or a new president with the full backing of congress, or both, markets should remain under selling pressure.

NYSE Volume 1,332,073,000
NASDAQ Volume 2,246,544,000