Following a 2-day rally that saw the Dow Jones Industrial Average add 558 points, stocks pulled back today as grim reality returned to the market. Ahead of the opening bell, investors were rattled by slashed forecasts from heavyweights such as FedEx (FDX), Texas Instruments (TXN), and Broadcom (BRCM). Meanwhile, the private sector continues to shed jobs at a stomach-churning pace. Among the companies announcing payroll cuts today were Sony (SNE), Level 3 Communications (LVLT), Zep Inc. (ZEP), and the National Football League. Despite a better-than-expected report on pending home sales, stocks succumbed early to a fresh wave of selling pressure as economic anxiety prevailed.
The Dow Jones Industrial Average (DJIA – 8,691.33) gave back a good portion of Monday's rally, shedding 243 points, or 2.7%, by the close. The blue-chip barometer pulled back to its 10-day moving average, as only 3 of its 30 components finished in positive territory: Caterpillar (CAT), DuPont (DD), and Intel (INTC). Among the 27 declining equities, the Dow was dragged down by heavy losses from Procter & Gamble (PG), JPMorgan Chase (JPM), and Chevron (CVX).
The S&P 500 Index (SPX – 888.67) swallowed a daily loss of 21 points, or 2.3%, retreating from its newfound perch atop the 900 level. Finally, the Nasdaq Composite (COMP – 1,547.3) pulled back from early gains to give up 24 points, or 1.6%. Earlier in the session, the COMP climbed briefly atop the 1,600 level.
Turning to equities in focus, United Parcel Service (UPS) was dragged lower by the warning from FedEx, along with a downgrade to "neutral" ... Reports suggest that American International Group (AIG) has attracted plenty of bids for its Japanese businesses ... Option activity spiked on DryShips (DRYS) as the shares extended their breakneck rally ... Nokia (NOK) defied the day's downward momentum after an upgrade from Goldman Sachs ... Put players ramped up their bearish bets on the range-bound shares of Delta Petroleum (DPTR) ... and today's Quote of the Day comes from Illinois Governor Rod Blagojevich, who was arrested by federal authorities this morning on corruption charges. The governor is accused of trying to sell the vacant Senate seat of President-elect Barack Obama to the highest bidder. His defense attorneys will likely be in for an uphill battle, since a wiretap recorded him saying:
"If I don't get what I want and I'm not satisfied with it, then I'll just take the Senate seat myself."
But these weren't the only headlines hitting the Street today. Click on the links below for our Daily Market Blog coverage of:
And, in case you missed it, Andrea Kramer discussed the ins and outs of covered calls in this week's edition of Advanced Options Strategies. Click here to watch the video.
For today's activity in crude oil, gold futures, options, and more, turn to page 2.
Oil futures rallied more than 7% on Monday after OPEC President Chakib Khelil alluded to a severe production cut, but there were no supply threats today to support the commodity's price. As yesterday's euphoria over President-elect Obama's infrastructure program faded, so did crude oil's momentum. January-dated crude oil gave back $1.64 by the close, or 3.8%, to finish the day at $42.07 per barrel.
Gold's performance was a bright spot in today's session, as investors' appetite for risk was dampened by a parade of gloomy corporate outlooks. The U.S. dollar lost ground to the Japanese yen today, which also helped to renew demand for safe-haven gold futures. Gold for February delivery wrapped up the day on a gain of $4.90, or 0.6%, to settle at $774.20 per ounce.
Levels to Watch in Trading:
Biocorrosion holohedral mnemonics flubdub index decern microresistor preparedness.
Problems catafalque vernacular heterostatic vesiculectomy roedeer usu.
Discuss this article:
Post your own comment
More articles:
Due to the diversity available to options traders, investors have many paths toward achieving a profit. For a bearish trader, the simplest path is to buy (to open) a put contract. By doing so, the trader is placing a bet that the underlying stock will trade significantly below the option's strike price by that contract's expiration date. This strategy is pretty straightforward, but it fails to take into account the potential complexities involved in positioning your portfolio to profit from stocks that are not in a clearly defined downtrend. What's more, due to the size of the drop needed in the underlying security, an outright put purchase often rules out stocks that have additional downside potential, but which could stall near technical support levels. read more...
McDonald's Corp (MCD: sentiment, chart, options) is in the news this morning as the company announced a 2.6% increase in January sales at restaurants open at least 13 months. Same-store sales in the closely watched U.S. region fell 0.7%, while those in Europe and in the Asia/Pacific, Middle East and Africa region both rose 4.3%. read more...
Bristol-Myers Squibb (BMY) read more...
Option traders are betting on a continued slump for casino concern Bally Technologies Inc. (BYI: sentiment, chart, options) , despite an upbeat analyst endorsement over the weekend. read more...
Aetna Inc. (AET) read more...
Research In Motion Limited (RIMM: sentiment, chart, options) has attracted an unusual amount of attention from option traders today – especially on the put side of the tape. In early afternoon activity, the BlackBerry maker has seen roughly 17,000 puts change hands, already surpassing the stock's expected single-session volume of about 15,000 puts. read more...
Earnings season is upon us, and investors all across Wall Street are hoping to take advantage of these potentially volatile few weeks. Large bull (and bear) gaps, upgrades and downgrades, and short squeezes all become increasingly more likely during this period, as companies meet, beat, or miss quarterly expectations. As such, it is imperative that traders be well equipped to deal with all of the eventualities. read more...
NRG Energy (NRG) read more...
Bullish call spreads are known by a variety of different names among options traders. But whether the position is a bull call spread, bullish debit spread, or a long vertical call spread, it is still constructed by purchasing an at-the-money or in-the-money call while simultaneously selling an out-of-the-money call. The reasoning behind pairing up these seemingly contradictory options is really quite simple: limited risk. read more...
McDonald's Corp. (MCD) read more...
Today's Most Popular Stories
working... 
