The major stock averages in New York closed more than 1% lower Wednesday after an afternoon selloff as stocks took what may be a technical breather. The Dow Jones Industrial Average finished down by 173.47 points, or 2.05%, at 8300.02, while the S&P 500 gave up 17.27, or 1.9%, at 893.06. The Nasdaq was down 19.35 points, or 1.1%, at 1731.08. "There's no real major news event that's come out that's leading the selloff," says Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "We're up against a technical level, and it's easier said than done to get above it." The number he's watching is the 200-day moving average on the S&P 500, which is 932. The high today was 913.84.
"It's simply time for a break," says Detrick.Losses in stocks accelerated as longer-dated Treasuries fell sharply in the afternoon despite favorable results to the Treasury's $35 billion auction of five-year notes earlier in the day; the 10-year was lower by 1-18/32, yielding 3.74%, and the 30-year was down 1-17/32, to yield 4.65%.
The selloff in Treasuries could have been related to the lack of reaction to the favorable auction; selling ahead of tomorrow's sale of seven-year notes; investors in mortgage-related securities hedging against duration risks; or the possibility that the Federal Reserve is reining in the pace of securities purchases, writes Tony Crescenzi, chief bond strategist at Miller Tabak and a RealMoney.com contributor.
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