Stocks kicked off the holiday-shortened week on a sour note today, thanks to fresh financial concerns from across the pond. According to the Wall Street Journal, European banks may harbor more risky debt than the recent round of stress tests revealed, reviving fears about the true fiscal health of the euro zone. As a result of the uncertainty, investors shunned stocks in favor of "safe-haven assets" like Treasury notes and gold, with the widespread worry translating into a record high for the malleable metal. Against this backdrop, the major market indexes snapped their four-session winning streak, with the Dow Jones Industrial Average (DJIA) giving up triple digits by the close.
"Everyone returned from the three-day weekend and decided to hit the 'sell' button, I guess," opined a senior technical researcher. From a broader standpoint, he thinks the S&P 500 Index (SPX) will eventually break north of its current range between 1,040 and 1,130, but says the big question will be the catalysts.
"I think it'll be two things: better-than-expected third-quarter earnings, and the excitement – whether you like it or not – of gridlock coming to Washington this November in the form of the Republicans in power in the House," he explained.
The Dow Jones Industrial Average (DJIA – 10,340.69) settled near its session lows today, giving up 107.2 points, or 1%, by the close. Only four of the Dow's 30 blue chips bucked the trend – General Electric, Coca Cola Co., McDonald's Corp., and Verizon Communications – with American Express and Walt Disney pacing the 26 decliners.The S&P 500 Index (SPX – 1,091.84) swallowed a loss of 12.7 points, or 1.2%, today, surrendering its short-lived perch atop the 1,100 level. In the same vein, the Nasdaq Composite (COMP – 2,208.89) backpedaled 24.9 points, or 1.1%, to finish near its own session nadir.
Crude futures finished the session south of breakeven today, as revived concerns about Europe's fiscal health sparked fears of waning demand. Furthermore, the euro-zone jitters bolstered the greenback against its European rival, making it more expensive for holders of foreign currency to buy the dollar-denominated commodity. By the close, crude oil for October delivery shed 51 cents, or 0.7%, to end at $74.09 per barrel.
Meanwhile, renewed fears about European balance sheets proved to be a boon for gold futures today. The precious metal's status as a safe-haven investment lured a plethora of nervous traders, sending December-dated gold futures $8.20, or 0.7%, higher to end at $1,259.30 an ounce – a new record peak.HAPPY TRADING
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