The S&P 500
(INDEXSP:.INX) hit a record high for the fourth day in a row on Monday morning, but the bears pounced to put stocks in the red.
US stock futures were up early this morning, following positive action in overseas markets as China recently announced a number of pro-growth initiatives, including an easing of the one-child policy and an allowance for private investment in state-run companies.
And shortly after the open, the S&P broke the 1800 mark for the first time ever, hitting 1802.33.
At 10:00 a.m. EST, the November NAHB Housing Market Index was reported, coming in at 54 vs. the 56 consensus, though housing stocks actually rallied following the release of the number.
Elsewhere on the economic front, William Dudley, President of the Federal Reserve Bank of New York, gave a speech indicating that he was optimistic about the economy, expecting an acceleration of growth in 2014 and 2015. This could indicate that the Fed is closer to curbing its quantitative easing activities, which are currently running at $85 billion per month.
That notion drove the dollar higher and commodities lower, which typically indicates a “risk-off” posture.
And that would make sense within the context of today’s market action, as we saw significant deterioration in bull-friendly areas of the market. Momentum stocks like Tesla
(NASDAQ:YELP), and Facebook
(NASDAQ:FB) were absolutely clobbered, dragging down the Nasdaq
(INDEXNASDAQ:.IXIC), while financials and the aforementioned housing names gave up early gains to finish lower.
One important factor in the sell-off was Carl Icahn’s statements at the Reuters Global Investment Outlook Summit. Mr. Icahn said he was very cautious on stocks, and that the market could easily see a big drop. That news hit the wires just after 3:00 p.m. EST, setting off a wave of selling that took the S&P down to 1791.53, a decline of 0.37% on the day.
However, it must be noted that the market was showing signs of stress before the Icahn news, including the turnaround in housing names, so it’s possible that a decline was destined following an impressive advance in recent days.
Tomorrow's Financial Outlook
At 8:30 a.m. EST, the third-quarter Employment Cost Index will be released. Surveyed economists expect a reading of 0.5%. It is unlikely to have a significant impact on trading.
However, earnings reports from retailers Best Buy
(NYSE:BBY) and Home Depot
(NYSE:HD) are on tap tomorrow and could give traders insights on spending trends as we head toward the close of the year.
Many market participants are already looking ahead to Wednesday, at which point a wealth of data will be released, including retail sales and CPI. And of course, we will also receive the FOMC minutes from the October meeting, which could give us insight into why the Fed chose not to taper the QE program.
No positions in stocks mentioned.
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