Global markets were once again dripping in red ink. The dollar's strength pushed commodity-related stocks lower even though oil is only down about 0.5% and gold has managed to post a small gain today. Disappointing earnings reports from Dell and homebuilder D.R. Horton also weighed on sentiment. Plus, sobering comments from ECB President Trichet helped push stocks lower.
Asian markets stumbled with both the Japanese NIKKEI and the Hong Kong Hang Seng down four days in a row. The NIKKEI lost 0.5% on Friday and pushed its weekly losing streak to four weeks in a row. Investor sentiment has been souring. The Japanese government said the economy has officially fallen back into deflation for the first time since 2006. The Hong Kong Hang Seng lost 0.8% on the session. The Chinese Shanghai index shaved off 0.3% and snapped a five day winning streak.
Stocks were down across the board in Europe with most of the major bourses down four days in a row. Stocks tried to rally this morning but by midday the indices had turned negative. Financials were some of the worst performers on renewed fears of major losses due to exposure to Ukrainian debt. Meanwhile European Central Bank President Jean-Claude Trichet was making headlines. In a speech at the European Banking Congress in Germany, Trichet said, "It is surely too early to say the crisis is over," but he went on to say that the time has come for the ECB to start withdrawing some of its easy money policies to avoid causing inflation. The English FTSE lost 0.3%. The German DAX gave up 0.68%. The French CAC-40 fell 0.8%.
Another bounce in the dollar was a major drag on stocks today. At least that's where the media is pointing their finger. It could also be a case of traders playing it safe and taking money off the table after seeing how Monday's bullish breakout has failed. Disappointing corporate earnings from DELL and DHI didn't help. DELL reported earnings last night and missed estimates by 5 cents. Revenues were off about 15% and also missed estimates. Wall Street was very disappointed by the big miss in gross margins. Shares of DELL gapped open lower and they're currently down about 10% near $14.25. Investors were also unhappy with results from D.R. Horton (DHI). Analysts were expecting a loss of 43 cents a share. DHI delivered a loss of 73 cents with revenues falling almost 35%. The company's cancellation rate came in at 27%. Shares of DHI are off 15% and falling under their 200-dma. The DJUSHB home construction index is down 5% on the session.
Another wet blanket on the market was the individual state unemployment figures. The Labor Department said unemployment rose in 29 states in October compared to a rise in 22 states the month before. There were new record high unemployment rates in California, Delaware, Florida, and South Carolina.
I did hear some positive news. A J.P. Morgan analyst raised their year-end price target on the S&P 500 from 1100 to 1160. Currently the S&P 500 is off about 0.6% at 1088 and trading near last week's lows. The Dow Industrials are off about 0.4% around 10,287. The NASDAQ composite is off 0.78% near 2139 and nearing potential support at its 50-dma. The small cap Russell 2000 index is off 0.77% and nearing the 580 level.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick review of the OptionInvestor.com play list reveals that ACGL is seeing some profit taking with a 1.7% decline. CVX hit our stop loss at $76.75. Regional bank NTRS is sinking to new relative lows. RIMM is trying to bounce but it's finding new resistance at the $60.00 level.