Traders Take Profits in Energy and Commodities
Stocks sagged on Monday in response to worries about global growth, inflation, and some big names making some big trades. Although the Dow managed to finish with a green number, the S&P 500 fell -.28%, the NASDAQ dropped -0.32% and the market-leading Midcaps fell-0.70%. And with breadth and volume statistics all finishing with decisively negative readings, it is tough to call it an up day.
The drivers of the market action were not obvious on Monday as there was only one headline that could be attributed to the positive open for stocks once again turning into yet another sloppy session. About mid-morning the IMF announced that it was reducing its estimate on global growth to 2.8% and went on to make cautionary comments regarding the recent spike in oil prices. The IMF commented that while the move in oil is not yet a concern, further gains in crude could derail global growth.
Armed with new worries about global growth, traders decided it was time to take profits in energy and commodities. This theme was furthered by word that Goldman Sachs was exiting a very large commodity trade and talk of a massive bet against silver in the futures market. Thus, with no economic inputs to work with, an options expiration week at hand, and the earnings parade still a couple of days away, traders apparently decided to do some de- risking.
Turning to this morning… The downbeat mood continues in the early going in response to disappointing results from Alcoa (AA) and Japan raising the severity level of its nuclear crisis (the level 7 rating is the same as was given Chernobyl).
On the Economic front… The calendar remains fairly quiet today. We will get a report on Import Prices before the bell and then Retail Sales on Wednesday, PPI and Initial Jobless Claims on Thursday, and CPI and Empire Manufacturing on Friday.
David D. Moenning
Editor: The Daily Decision
