YAHOO [BRIEFING.COM]: Weakness
among financial stocks led to a broad-based selling effort that resulted in the
stock market's worst single-session percentage decline in one month. Though
stocks finished off of session lows, they still closed in weak fashion, unable
to garner support and limit losses as they did in the previous session.
The downturn left the S&P
500 just below 995, which is considered a support level below the
psychologically significant 1000. Many market watchers regard 990 as the next
level of support, followed by 980.
Tuesday started with modest
losses until sellers made a concerted move against financials. The financial
sector shed 3.5% as regional banks and diversified banks fell a respective 4.2%
and 5.6%. Diversified financial services firms fell 4.4%.
CIT Group (CIT 1.20, -0.28) was one of the worst
performers by percent lost. The company fell sharply out of favor by delaying
its quarterly filing.
All 10 major sectors in the
S&P 500 finished in the red. Behind financials, energy was the next worst
performing sector. It finished with a 1.7% loss, less than half the loss that
hit financials. Energy was dragged lower by weakness in the broader market and
1.6% decline in crude oil prices. Oil settled at $69.45 per barrel.
Neither corporate news nor
economic data had any meaningful or lasting impact on the broader market this
session. Stock futures did show some knee-jerk buying before the opening bell
when participants learned that second quarter productivity increased a
better-than-expected 6.4%, which was the strongest increase since the third
quarter of 2003, and unit labor costs during the second quarter fell 5.8%,
which was sharper than expected and the steepest drop in eight years. In other
economic news, wholesale inventories fell for the 10th straight month by
dropping a sharper-than-expected 1.7% in June.
Tomorrow afternoon the FOMC
announces its rate decision and releases its latest policy directive, which
could provide a meaningful catalyst to trading. Participants will also be
keeping an eye on the results of tomorrow's 10-year Treasury Note auction,
which carries significantly more importance than today's $37 billion auction of
3-year Treasuries. Today's auction drew a yield of 1.78% and carried a
bid-to-cover ratio of nearly 2.9, which is above recent averages.
Treasuries made a bit of a pullback in the wake of the announcement, but recovered into the close. In turn, the benchmark 10-year Note gained 27 ticks, which sent its yield well below 3.7%. The yield on the 10-year Note has shed more than 10 basis points so far this week.DJ30 -96.50 NASDAQ -22.51 NQ100 -1.0% R2K -1.7% SP400 -1.4% SP500 -12.75 NASDAQ Adv/Vol/Dec 719/1.94 bln/1931 NYSE Adv/Vol/Dec 788/1.20 bln/2235