There are generally reasons for every zig and zag during a session, but sometimes they’re tough to uncover. Today might be one of those days.
(Thursday Market Close) There are generally reasons for every zig and zag during a session, but sometimes they’re tough to uncover. Today might be one of those days.
But there does seem to be a pattern shaping up here. The markets start out on somewhat shaky ground, get their footing by late morning to early afternoon, and then lose much of the momentum by the close.
In midday trading today, the markets looked like they were on pace to end solidly in the green. But then the last hour of trading began and the gains melted. By the time the session settled, the Dow Jones Industrials ($DJI) had lost more than half of its intraday high of 301 points, rising 0.66% while the S&P 500 (SPX) barely managed to end in positive territory, up only 0.10%. That did, however, give the two benchmarks their first session higher in three days. Not so for the Nasdaq Composite (COMP), which was losing its mojo earlier and ended off 0.11%.
General Electric (GE), Caterpillar (CAT), and United Technologies (UTX) were Dow leaders throughout much of the day. Financials, which were up big time yesterday, were today’s biggest laggards. It’s not unusual for financial stocks to get some headwind amid chatter about higher interest rates. Yesterday’s markets tie-in to the Federal Reserve’s concern about inflation might explain that move higher.
The energy sector had been leading the S&P for much of the day. Chesapeake Energy (CHK) closed higher by 21%. Earlier, the shale gas pioneer reported earnings that solidly outpaced Wall Street’s expectations.
Speaking of energy, crude oil prices climbed 1.85% to finish the session at $62.77. Inventory reports out earlier today showed inventory that was down 1.6 million barrels. Crude oil prices touched a hair above the $63 a barrel level in intraday trading, but as we’ve seen in recent sessions, they’ve been unable to close at that level over the last two weeks.
Shares of Amazon (AMZN), which hit $1,500 for the first time yesterday, were pressured throughout much of today’s trading. That had some analysts suggesting that the stock had peaked at $1,500. Shares had fallen to as low as $1,475 before gaining ground to end higher by 0.16% at $1,485.
So, yes, today’s trading, like many of the others before it in recent sessions, was all about the V-word: volatility. And Wall Street’s fear gauge, the Volatility Index (VIX), probably could offer a good picture of how the metric rises and falls, and impacts the markets. (See chart.)
Among other big laggards today, shares of Roku Inc. (ROKU) tumbled 17% after the manufacturer of streaming video players offered weak guidance.
FIGURE 1: TRACKING THE VIX.
If there was any question about the volatility that seems to have overtaken the markets this month, a peek at the day-to-day rise and fall of the VIX might be telling. Data sources: CME Group, Standard & Poor’s. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.
Good Trading, JJ @TDAJJKinahan
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