The Dow Jones Industrial Average (DJI) enjoyed just a few moments in the black before the bears attacked, with the blue-chip barometer dropping triple digits by the close. President Barack Obama's trip to the podium did little to stop the proverbial bleeding, with the commander-in-chief merely calling for bipartisanship, tax hikes for the wealthy, and ideas to help avert the "fiscal cliff." Meanwhile, a round of unimpressive economic data, unsurprising news from the Fed, and escalating tensions in the Middle East also didn't help.
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Things just kept getting worse for the Dow Jones Industrial Average (DJIA), which surrendered 185 points, or 1.5%, by the time the bell mercifully sounded. As such, the index ended south of the 12,600 level for the first time since July 12, bringing its week-to-date loss to 1.9%. Of the Dow's 30 components, just Cisco Systems (NASDAQ:CSCO) managed a win, tacking on 4.8% on the heels of a solid earnings showing. Meanwhile, Bank of America (NYSE:BAC) paced the 29 decliners, giving up 3.6%.
It wasn't any better for the S&P 500 Index (SPX), which shed 19 points, or 1.4%, to end near a session nadir. In similar fashion, the Nasdaq Composite (COMP) retreated 37 points, or 1.3%, to mark its lowest settlement since late June.
On the other hand, the CBOE Market Volatility Index (VIX) -- otherwise known as the market's "fear gauge" -- capitalized on the uncertainty, advancing 7.6% to climb back atop its 200-day trendline.
A Trader's Take
"Where do we start?" said Senior Technical Strategist Ryan Detrick. "Simply put, the bears are still in control. Getting into the specifics, the market was lower in the morning, then sold off more after President Obama spoke. We can blame Obama, Europe, Greece, or even Spain for the recent troubles; all are getting blamed for the recent weakness, and today was no different."
Among equities in focus, he says, "those net short or long Facebook had a helluva day. Congrats. But if you were long, then today was more misery. One nice thing about today was the round of earnings reports, which were pretty well-received. Cisco Systems, Abercrombie & Fitch (ANF), and Staples (SPLS) all had some nice things to say. Given this earnings season has been very weak, this was a nice change of pace, despite a pretty ugly day."
His advice to investors? "It's important to remember not to be a hero here," he said. "We will bottom eventually, and we could be getting very close, but with all of the uncertainties that remain, be careful."
Economic and Earnings News
While the Federal Open Market Committee (FOMC) didn't make any major moves at its October meeting, the group is considering its options after Operation Twist expires at the end of this year.
"Looking ahead, a number of participants indicated that additional asset purchases would likely be appropriate next year after the conclusion of the maturity extension program in order to achieve a substantial improvement in the labor market," according to the minutes of the FOMC's Oct. 23-24 meeting. However, "several participants questioned the effectiveness of the current purchases or whether a continuation of them would be warranted if the recent moderate pace of economic recovery were sustained."
Retail sales declined 0.3% in October to a seasonally adjusted $411.59 billion, reported the Commerce Department. The drop was steeper than forecast, with economists calling for a smaller 0.2% contraction. Superstorm Sandy had a mixed impact on sales; while some stores saw a surge of shoppers stocking up on storm supplies, other outlets were impaired by post-event closures and slowdowns in store traffic.
The producer price index (PPI) dropped by a seasonally adjusted 0.2% in October, according to the Labor Department, marking its first decline in five months. Excluding food and energy prices, the core PPI also fell 0.2%, as a rise in food costs offset a drop in energy expenses. The core index hadn't experienced a monthly drop since November 2010. Economists were caught off-guard by the data, with the consensus looking for the headline PPI to rise 0.2% and the core PPI to gain 0.1%.
Business inventories swelled 0.7% in September to a seasonally adjusted $1.613 trillion, reported the Commerce Department, edging past economists' expectations for a 0.6% rise. Sales for the month were up 1.4% to $1.264 trillion, logging the biggest jump since March 2011. The inventory-to-sales ratio edged down to 1.28.
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