Yesterday's post- Fed party left the market with a lingering headache as stocks coasted lower. Judging from the light volume, a lot of investors simply opted out for the day.
Major proxies chopped lower out of the gate and were lately all in the red. The
Dow Jones Industrial Average was down 157, or 1.4%, to 10,778, while the tech-laden
Nasdaq Composite Index was off 80, or 2.1%, to 3638. The broader
S&P 500 was down 21, or 1.5%, to 1445, while the
Russell 2000 was down 7, or 1.5%, to 499.
Yesterday, after the Federal Reserve doled out its most aggressive rate hike in five years, stocks initially stumbled but managed to regain their momentum and wrap up a day of solid gains. The blue-chip Dow had lately surrendered all of yesterday's 126-point gain. The Nasdaq was close to erasing yesterday's 109-point pop.
Adam Wagner, president of
Wagner Hermann & Herbst
in Houston, was having difficulty making sense of the recent market action. Referring to the 50-basis-point hike and the Fed's
hints at further tightening, he said, "That was pretty much the worst announcement they could make. Some people felt like 'Look out, we're going to retest the lows,' but there was also a lot of talk that maybe this is a good thing," if the tightening cycle is going to draw to a close sooner, he said.
The "super selloff" immediately after the announcement was expected, Wagner said. "I don't know what to make of
today's selling. Anything can happen. It's like this is Stock Market 102. Forget everything you learned in Stock Market 101."
Ray Hawkins, vice president of block trading at
, viewed the action as "just a reprieve from yesterday," saying that people are realizing interest rates aren't done going up. Hawkins also mentioned an upcoming options
expiration on Friday, noting that Wednesday and Thursday are the days where things get shifted around beforehand. "All things considered, it's not that bad," he said. "We're putting out bids and not finding sellers. There's a lot of people sitting on their hands."
was hurting the Dow. H-P and its spinoff
were tumbling after both companies reported solid earnings
last night. H-P was off 5.9% while Agilent was down 10.1%.
was a rare green spot in the blue-chip Dow, lately up 1.7%, though it wasn't representing the general direction of financial stocks. The
American Stock Exchange Broker/Dealer Index
was down 1%, while the
Philadelphia Stock Exchange KBW/Bank Index
was off just a fraction.
was edging up 0.1%, and
had reversed earlier weakness to rise 0.6%.
Semiconductor stocks were taking a rest after yesterday's action, with the
Philadelphia Stock Exchange Semiconductor Index
down 1.3%. News of a minor earthquake in Taiwan wasn't lending any confidence amid the overall weakness today. But
was jumping 8.6% after delivering strong second-quarter earnings and a sunny outlook. The company said its revenue could rise more than 65% for the full year.
Internet stocks were under water, with
TheStreet.com Internet Sector
index off 27, or 2.9%, to 902. Analysts and fickle investors were frowning on the finally announced merger of Spain's
and U.S.-based portal
. Terra was sliding 10.6%, while Lycos was off 12.2%; Terra parent
was off 6.2%. This morning
cut Lycos to hold from outperform, while
analyst Peter Bradshaw cut Terra to neutral from accumulate.
downgraded Lycos to hold from buy.
was down 1.8%, while
was pushing up 1.2%.
Most airline stocks were riding higher, with the
American Stock Exchange Airline Index
was up 4.4%, while
Delta Air Lines
was rising 0.3%. The
Dow Jones Transportation Average
was down 0.6%, though, largely on weakness in
The 10-year Treasury was down 9/32 to 100 7/32, its yield rising to 6.47%.
Breadth was negative, particularly on the Big Board, on light volume.
New York Stock Exchange:
824 advancers, 1,929 decliners, 479 million shares. 16 new 52-week highs, 39 new lows.
Nasdaq Stock Market:
1,210 advancers, 2,513 decliners, 678 million shares. 12 new highs, 62 new lows.
For a look at stocks in the midsession news, see Midday Stocks to Watch, published separately.