I told you so will be a familiar refrain in the wake of today's session, which provided fodder for those who argued that Wednesday's reversal was
destined to be short-lived. The skeptics' case is pretty simple: Major averages slumped despite some better-than-expected economic news, undermining whatever positives were generated by yesterday's reversal. Buoyed by components such as Boeing ( BA), the Dow Jones Industrial Average rose to as high as 10,029.94 before sliding in the final 90 minutes to close down 1.1% to 9834.68. Meanwhile, the S&P 500 shed 1.6% to 1080.95 after trading as high as 1101.50. After hitting a high of 1769.37, the Nasdaq Composite lost 3.3%, closing at its session low of 1716.24. Even the optimist cited in today's Midday Musings admitted the Nasdaq's close below yesterday's intraday low of 1729.20 has ominous overtones. "As long as yesterday's lows remains intact, so does yesterday's positive result," Michael Paulenoff, founder of 2Mstrategies.com, said before the market closed. With both that level, plus 1750 having been violated -- which represented a 60% retracement of yesterday's advance, "a full-fledged retest could be in the cards," he said. Meanwhile, the S&P traded precisely to key support at 1080, which represents the index's lows from last spring and its pre-Sept. 11 September low. Similarly, the S&P 500 futures settled at 1089, just above its March 19 low of 1088.50. All three major averages were restrained by Intel ( INTC), which fell 6.2% after Banc of America Securities cut its earning estimates on the chip giant. Microsoft ( MSFT) was also a drag on the three major averages, falling 3.1%. The S&P and Comp were further weakened by Cisco ( CSCO), which slid 9.5% after CEO John Chambers reportedly made some cautious comments at a meeting with analysts. In both form and function, today was pretty much the reverse of yesterday. As was the case Wednesday, thousands of reasons were offered for today's selloff, although no single clear catalyst emerged. And as was the case yesterday, some participants where left groping for meaning in the selloff, or at least for the cause. "The bottom just fell out. I don't have any idea why," Todd Clark, managing director of listed trading at Wells Fargo Securities, told my colleague Justin Lahart. In addition to weakness in the aforementioned tech bellwethers, traders noted the record quarterly loss and profit warning produced by Ciena ( CIEN), as well as a midmorning profit warning and capital-spending cut announcement by BellSouth ( BLS). Of course, accounting concerns continue to hound the market. In addition to Chambers' comments, Cisco was hurt by an article in The New York Post that compared some of Cisco's partnerships with those at Enron. Also, concerns about IBM's ( IBM) accounting continue to circulate, pushing Big Blue's shares down another 3%. Prospects for further terrorist attacks was a final factor cited by market participants as fueling the selling pressure. Several traders noted the latest escalation of tensions between Israel and the Palestinians, which ratcheted even higher today following inflammatory comments by Israeli Prime Minister Ariel Sharon. There's a new trade and a "gruesome trade," of selling stocks and buying bonds ahead of big events that could be terrorist targets, said Jim Bianco, president of Bianco Research in Barrington, Ill., who noted several high-profile events and the closing ceremonies will occur at the Olympics in the coming days. As stocks wilted today, the price of the benchmark 10-year Treasury rose 8/32 to 100 5/32, its yield falling to 4.85%. Bonds probably would have fared even better had it not been for a string of better-than-expected economic data, including the Philadelphia Fed's index of business activity, the Index of Leading Economic Indicators and the trade deficit report. (Meanwhile, I'll be curious to see how the press outlets that attributed yesterday's gains to strong economic data will explain today's selloff.) All of the above certainly contributed to the market's malaise today. But the ongoing groping for the reasons why harkens back to comments from Ike Iossif, president of Aegean Capital in Chino Hills, Calif., which were published yesterday afternoon but are worth repeating. "There is no point in trying to overintellectualize why bull markets go up; they do not need any particular reason. They just go up, that's what bull markets do," Iossif commented. "By the same token, there is no point in trying to overintellectualize why bear markets go down. They do not need any particular reason; they just go down, that's what bear markets do." In the ongoing search for levity in these trying times, that quote (still) reminds me of the scene in Blazing Saddles in which Harvey Korman's character unleashes his band of bandits with the admonition: "Now go do, that voodoo, that you do so well."