Today was a wild one on wall street, with the most volatility we have seen in quite a while. The markets all rallied nicely this morning, with the Dow and S&P both hitting new all-time highs intraday. This afternoon at around 2 pm the sellers stepped in and the markets dove in a matter of minutes. As late as 1:45 pm the Dow was trading near 14,200 and by 3:30 pm the Dow traded as low as 13,950. The Nasdaq was even harder hit this afternoon, sliding by over 2% from its afternoon highs to the close. The markets did rebound somewhat going into the close, but the sellers certainly did some damage this afternoon. The Dow finished down 64 points, while the Nasdaq lost 39 points. The S&P 500 lost 8 points, or just over .5% on the day.
The technology sector was the clear leader on the downside this afternoon, with many of the names that have been constantly hitting new highs of late selling off dramatically this afternoon. Most of these stocks were charging higher through the 2 pm time frame when everything dropped off and the selloff took hold. VMWare (NYSE:VMW) finished at $102.69 down 4.06%, after earlier hitting a new high at $114.88. Juniper Networks (Nasdaq:JNPR) closed lower by 3% on the day. The chip stocks were weak all day long today. NVIDIA Corporation (Nasdaq:NVDA) lost 4.5% on the day. Texas Instruments (NYSE:TXN) fell 3.19% after an analyst downgrade. Sandisk Corporation (Nasdaq:SNDK) was also downgraded, and it lost 5.48% today. Akamai Technologies (Nasdaq:AKAM) traded lower by 5.2% after earlier being higher by over 2%. Amazon.com Inc. (Nasdaq:AMZN) fell by 5.2% as well, as it fell by over 6 points from its intraday high.
Construction stocks were also weak on the day. Caterpillar (NYSE:CAT) fell by 2.12%. Foster Wheeler (NYSE:FWLT) shares lost 3.26% today. The aerospace sector continued yesterday's weakness into today. Boeing (NYSE:BA) fell another 2.45% today.
Most retail stocks finished lower after a mainly negative same stores sales picture this morning clouded the view for retailers going into the holiday shopping season. Sears Holdings Corporation (Nasdaq:SHLD) fell by 2.9% as it continues to languish. Dillards (NYDE:DDS) fell 4.57% today after disappointing sales figures. The Men's Warehouse (NYSE:MW) plunged 8.91% after it provided a dreadful midquarter update.
There really are two ways to look at today's market reversal. You could take the viewpoint that stocks were simply due for a pullback and some profit-taking and it was nothing to worry about. Alternately, you could take the viewpoint that today's market reversal is concerning for bulls because of the volume and the conviction behind the late day selloff.
Interstingly, the volume on the Nasdaq really kicked up this afternoon after being quite low through the rally early on today. The QQQQ powershares trust recorded its highest volume day since August, trading double the amount of shares it has been recently while the market has moved higher. The up vs. down volume points out the conviction in the afternoon selloff. The down volume ended at 78% on the NASDAQ while the up volume was 21%. This is a staggering number since the majority of the day was spent in positive territory.
I tend to think that today's selloff is the sign that a pullback is imminent. Earnings growth is clearly showing a slowdown so far for 3rd quarter numbers, and stocks have just continued higher despite that negative news. I think the market will be fine in the long run, but a day like today shows that there is certainly some short term downside risk in this market.
Where do you stand on today's market? Was today a blip or the start of some pressure on the markets?
I say it is a blip. This is a complete guesstimate of course. I think tech stocks will see growth into january and then sink, especially my (and many others) fav-stock AAPL.
Posted by: Nick | October 11, 2007 11:23 PM | Permalink to Comment