Stock Market Goes On A Rollercoaster Ride

Thursday’s stock market activity had the major stock indices bouncing in and out of positive territory enough times to cause motion sickness.

Thursday’s stock market rollercoaster ride was best explained by the S&P 500 chart. After starting Thursday’s trading session in the red, the S&P broke into positive territory at 11 minutes into the session, before falling back into the red. It then went through five more of those cycles before finally finishing the session with a moderate decline. A mixed bag of earnings reports left investors without a compass after Wednesday’s FOMC Statement provided no clear signals as to when the Federal Reserve will taper back its liquidity pump, which has been fueling equities markets for the past five years.

The Dow Jones Industrial Average (DIA) lost 73 points to finish Thursday’s trading session at 15,545 for a 0.47 percent decline. The S&P 500 (SPY) fell 0.38 percent to 1,756 while failing to hit a new record intraday high for the first time this week.

The Nasdaq 100 (QQQ) declined 0.23 percent to finish at 3,377. The Russell 2000 (IWM) fell 0.48 percent to 1,100.

In other major markets, oil (USO) declined 0.46 percent to close at $34.69.

On London’s ICE Futures Europe Exchange, December futures for Brent crude oil declined 93 cents (0.85 percent) to $108.93/bbl. (BNO).

December gold futures declined $26.90 (1.99 percent) to $1,322.40 per ounce (GLD).

Transports got busted at the “weigh station” on Thursday, as the Dow Jones Transportation Average (IYT) fell 0.50 percent.

In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks sank on Thursday as the yen gained unwanted strength. A stronger yen causes Japanese exports to be less competitively priced in foreign markets. Although the yen initially weakened as far as 98.56 per dollar during Thursday’s trading session in Tokyo, it gained strength against the Euro. The yen eventually strengthened to 98.42 per dollar and during the last 20 minutes of the session, it abruptly strengthened to 98.33, causing stock prices to fall during the same period (FXY). Disappointing earnings reports from Toshiba and Honda intensified bearish sentiment. The Nikkei 225 Stock Average sank 1.20 percent to 14,327 (EWJ).

China’s stock market headed into the red on Thursday, as the financial sector led the way down in the wake of disappointing earnings reports from Industrial and Commercial Bank of China as well as China Construction Bank. The Shanghai Composite Index fell 0.87 percent to close at 2,141 (FXI). Hong Kong’s Hang Seng Index declined 0.42 percent to end the day at 23,206 (EWH).

In Europe, stocks made big gains after a number of upbeat earnings reports, particularly from the automotive and financial sectors. Spain’s Banco Popular saw its share price skyrocket 7.4 percent on Thursday, as its year-to-date earnings impressed investors. The Euro STOXX 50 Index finished Thursday’s session with a 0.90 percent advance to 3,067 – climbing further above its 50-day moving average of 2,910. Its Relative Strength Index is 68.32 (FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,694 despite finishing Thursday’s session with a 0.38 percent decline to 1,756. Its Relative Strength Index fell from 65.97 to 62.55. The MACD has taken a slight dip toward the signal line, suggesting the likelihood that the S&P 500 will decline in the immediate future.

For Thursday, most sectors finished solidly in negative territory, except for the industrial and consumer discretionary sectors. The financial sector took the hardest hit, with a 1.06 percent decline.

Consumer Discretionary (XLY): +0.25%

Technology: (XLK): -0.33%

Industrials (XLI): +0.02%

Materials: (XLB): -0.16%%

Energy (XLE): -0.36%

Financials: (XLF): -1.06%

Utilities (XLU): -0.33%

Health Care: (XLV): -0.47%

Consumer Staples (XLP): -0.52%

Bottom line: A wide spectrum of earnings reports left investors confused as to the anticipated direction of the stock market, after Wednesday’s FOMC Statement provided no clear indication as to when the Federal Reserve will begin the taper of its bond purchases.

Disclaimer: The content included herein is for educational and informational purposes only, and readers agree to Wall Street Sector Selector's Disclaimer, Terms of Use, and Privacy Policy before accessing or using this or any other publication by Wall Street Sector Selector or Ridgeline Media Group, LLC.