After a positive start on Wednesday, stocks lost their footing and fell throughout the afternoon as the Ukrainian situation rekindled.
Stocks were off to a nice start on Wednesday, as enthusiasm about a monetary policy shift by the European Central Bank raised hopes that the Eurozone economy could finally escape “disinflation”. Unfortunately, in an afternoon speech, President Obama reminded the world that the crisis in the Ukraine is not over and that more sanctions will be necessary to deter Russia from continuing with its expansionist objectives. As a result, the major stock indices slid into the red, with the Nasdaq taking another hard hit.
The Dow Jones Industrial Average (DIA) lost 98 points to finish Wednesday’s trading session at 16,268 for a 0.60 percent decline. The S&P 500 (ARCA:SPY) fell 0.70 percent to 1,852.
The Nasdaq 100 (NASDAQ:QQQ) dropped 1.29 percent to finish at 3,582. The Russell 2000 (ARCA:IWM) sank 1.92 percent to 1,155.
In other major markets, oil (USO) advanced 0.89 percent to close at $36.09.
On London’s ICE Futures Europe Exchange, June futures for Brent crude oil advanced 9 cents (0.08 percent) to $106.90/bbl. (United States Brent Oil Fund LP (BNO).
June gold futures declined $6.40 (0.49 percent) to $1,305.00 per ounce (SPDR Gold Trust (ARCA:GLD).
The transportation sector took on water during Wednesday’s trading session, as the Dow Jones Transportation Average sank 1.58 percent to 7,429 (IYT).
In Japan, the exchange rate for the yen remained the dominant factor in stock market activity. Japanese stocks advanced as the yen weakened to 102.38 per dollar during Wednesday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average advanced 0.37 percent to 14,477 (EWJ).
In mainland China, advances in the healthcare sector were offset by declines in the real estate sector. The Shanghai Composite Index retreated 0.18 percent to 2,063 (FXI). In Hong Kong, a batch of better-than-expected earnings reports led to a strong session. Hong Kong’s Hang Seng Index climbed 0.72 percent to 21,887 (EWH).
The European stock markets had another strong day, as the Ukrainian crisis seemed to be cooling down and good news from Spain kept investors feeling bullish. Companies with exposure to Russia had a “relief rally”. The Bank of Spain reported that it expects the nation’s GDP to beat forecasts in 2014 with 1.2 percent expansion. The Euro STOXX 50 Index jumped 1.08 percent to 3,130 – climbing further above its 50-day moving average of 3,084. Its Relative Strength Index rose from 52.05 to 56.71 (FEZ).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,833 on Wednesday, despite a 0.70 percent drop to 1,852. Its Relative Strength Index (RSI) fell from 55.08 to 49.79. The MACD is dropping away from the signal line, suggesting that the S&P could continue its decline during the immediate future.
On Wednesday, all sectors declined except for the healthcare sector, which managed to advance by 0.03 percent.
Consumer Discretionary (ARCA:XLY): -0.80%
Technology: (XLK): -1.21%
Industrials (ARCA:XLI): -1.02%
Materials: (ARCA:XLB): -1.44%
Energy (ARCA:XLE): -0.47%
Financials: (ARCA:XLF): -1.03%
Utilities (XLU): -0.42%
Health Care: (ARCA:XLV): +0.03%
Consumer Staples (ARCA:XLP): -0.23%
Bottom line: Investors went running for the sidelines on Wednesday afternoon, as stocks went sliding lower after President Obama reminded the world that the Ukrainian crisis is not yet over.
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