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Dow Jones Industrial Average Gives Up 17K, Small-Caps Struggle

Caution reigned ahead of second-quarter earnings season

by 7/8/2014 4:20:13 PM
Stocks quoted in this article:

Stocks slipped across the board today, and the Dow Jones Industrial Average (DJI) surrendered its foothold above 17,000 in the opening minutes of the session. With second-quarter earnings season about to kick off -- and the minutes from the latest Federal Open Market Committee Meeting (FOMC) due out tomorrow -- traders played it safe by taking some money off the table. "Riskier" sectors were particularly vulnerable, as some of the steepest losses were swallowed by tech names, social media stocks, and small-caps. In fact, by the time the dust settled, the Russell 2000 Index (RUT) was off 1.2%.

Continue reading for more on today's market, including:

  • Pandora Media Inc (NYSE:P) plummeted 7.3% today, leaving the shares back in the red for 2014.
  • An early upgrade to "buy" sent Groupon Inc (NASDAQ:GRPN) nearly 6% higher out of the gate, but the stock's gains evaporated by lunchtime.
  • A pair of airline stocks were targeted by bullish spread traders as sector-wide volatility soared.
  • Plus ... Job openings hit a recovery-era high, crude oil notches its eighth straight daily drop, and the cupcake bubble finally bursts.
Trading Topic of the Week -- Ways to Interpret Short Interest: Weigh the short interest ratio. This handy little indicator tells you approximately how much future buying power is pent up among the short-selling crowd.

The Dow Jones Industrial Average (DJI - 16,906.62) ended the day on a deficit of 117.6 points, or 0.7%, as 26 of its 30 components declined. The Boeing Company (NYSE:BA) shed 1.8% to pace the laggards, while Wal-Mart Stores, Inc. (NYSE:WMT) tacked on 0.8% to lead the three advancing issues. AT&T Inc. (NYSE:T) finished perfectly flat.

The S&P 500 Index (SPX - 1,963.71) gave up 13.9 points, or 0.7%, while the Nasdaq Composite (COMP - 4,391.46) fell 60.1 points, or 1.4%.

The CBOE Volatility Index (VIX - 11.98) popped higher, rising 0.7 point, or 5.7%. As a result, the "fear index" settled above its 40-day moving average for the first time since June 16.

CLOSING SUMMARY – INDICES

CLOSING SUMMARY – NYSE AND NASDAQ

5 Items on Our Radar Today:

  1. The Labor Department's Job Openings and Labor Turnover Survey (JOLTS) showed 4.64 million job openings in May -- a recovery-era high. While hiring and quitting activity were relatively stagnant for the month, layoffs dwindled to 1.56 million. (Investor's Business Daily)
  2. Speaking in North Carolina today, Richmond Fed President Jeffrey Lacker said he believes June's bullish payrolls report "provides a far more representative picture of economic trends" than that disappointing first-quarter gross domestic product (GDP) contraction. Nevertheless, Lacker remained characteristically cautious about the economic outlook: "I've come to the conclusion that a sustained acceleration of growth to over 3% in the near future is unlikely," he said. (The Wall Street Journal)
  3. Peak cupcake has been reached: Less than a week after Nasdaq suspended trading in the company's shares, Crumbs Bake Shop shuttered all of its stores Monday night. Crumbs is evaluating "its limited remaining options," according to a company statement, which may include filing for bankruptcy. (Bloomberg Businessweek)
  4. Sentiment toward Alcoa Inc (NYSE:AA) was cautious ahead of tonight's second-quarter earnings report.
  5. Blue-chip chip stock Intel Corporation (NASDAQ:INTC) was heavily targeted by front-month option bulls.

For a look at today's options movers and commodities activity, head to page 2.

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