Volatility Ramps Up as Dow Jones Industrial Average Sinks

Crude takes a sharp bounce, while copper sells off

Jan 14, 2015 at 4:20 PM
facebook twitter linkedin

It was another day of triple-digit trading for the Dow Jones Industrial Average (INDEXDJX:DJI); however, unlike yesterday's session, all of today's action was to the downside. There were a number of factors contributing to the risk-off backdrop, including a post-earnings plunge for one blue-chip banking name, an uninspiring global growth outlook from the World Bank, and a dreary reading on retail sales. At its session low, the DJI was off almost 350 points, and although the index pared a significant portion of these losses near the close, it still finished sharply lower for a fourth consecutive day.

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

The Dow Jones Industrial Average (DJI - 17,427.09) spent the entire session in the red, closing with a loss of 186.6 points, or 1.1%. Of the Dow's 30 components, 27 settled lower, led by JPMorgan Chase & Co.'s (NYSE:JPM) 3.5% plunge. Merck & Co., Inc. (NYSE:MRK) paced the three advancers with its 0.7% gain.

The S&P 500 Index (SPX - 2,011.27) was down nearly 35 points at its session low, but found support in the 2,000 region to settle with an 11.8-point, or 0.6%, loss. The Nasdaq Composite (COMP - 4,639.32) fared the best of its peers, closing down 22.2 points, or 0.5%.

The CBOE Volatility Index (VIX - 21.48) jumped 0.9 point, or 4.5%, to notch its highest daily close since Dec. 16.



5 Items on Our Radar Today:

  1. Despite "modest" to "moderate" growth in the 12 Federal Reserve districts, the central bank cited a drop oil prices as a threat to the economy in its latest Beige Book. Specifically, while falling gasoline prices could help consumers, it poses a greater risk to energy companies that may be forced to slow hiring or lay off workers to compensate for falling profits. (CNBC)
  2. Retail sales fell by a larger-than-expected 0.9% in December -- impacted by a swoon in consumer purchases and a drop in gasoline prices. Core sales -- which excludes automobiles and gasoline -- declined 0.4%. Not all retailers were impacted by a slow holiday season, though, with GameStop Corp. (NYSE:GME) rallying more than 10% in the wake of its holiday sales numbers. (Reuters)
  3. How implied volatility may have played a role in the pre-earnings activity seen in Xilinx, Inc.'s (NASDAQ:XLNX) options pits today.
  4. Car concerns General Motors Company (NYSE:GM) and Tesla Motors Inc (NASDAQ:TSLA) sold off today in the wake of words from their respective CEOs.
  5. A beginner's guide -- or a quick refresher -- on the advantages of buying call options.

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




Crude oil took a big bounce today, as bargain hunters overlooked a bigger-than-expected rise in domestic inventories. By session's end, crude for February delivery was up $2.59, or 5.6%, at $48.48 per barrel.

Gold eked out a win, thanks to its safe haven status. At the close, the February-dated contract was 10 cents higher at $1,234.50 per ounce. Copper, meanwhile, continued to pan five-year lows, with copper for March delivery -- the most active contract -- shedding 14 cents, or 5.3%, to $2.51 per pound.


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners