Nasdaq ($COMPQ) continues win streak, albeit by a small margin. The Naz bounced below and above the break even line most the session, ultimately ending up with a 1.06 point gain. The Dow ($INDU) never broke into the black, ending the day with a loss of 66.88 points to 9,156.21. The S&P 500 ($SPX) also lost about half a percent on Wednesday, but closed a few points above the key 1,000 mark. Volume was on the heavy side, with the NYSE trading 1.56 billion shares and the Naz turning over 2.07 billion. Market breadth was negative on the Big Board by an 18-to-14 margin. However, the Naz was exactly reversed, with gainers outpacing losers by an 18-to-14 ratio.
The Dow suffered today from negative comments about Alcoa (AA) and Altria (MO) at Morgan Stanley. Alcoa shares fell 1.32 percent on Wednesday despite beating earnings estimates by two cents in the second quarter. However, Morgan Stanley lowered its rating on the stock to “Equal Weight” from “Overweight.” Altria saw larger declines, falling 5.92 percent to close at $44. MO did come off its intraday lows, where it reached a low of $42.50. Morgan believes that litigation problems will resurface, taking a toll on the stock.
On the bright side, shares of Cisco (CSCO) rose slightly after CEO John Chambers stated that IT spending would improve in the next two to four months. Shares of chip giant Intel (INTC) rose to a new 52-week high after UBS raised its target price on the stock. However, Microsoft (MSFT) shares fell 0.83 percent after the software giant announced it would quit using stock options for employees and would instead use restricted stock. The company also stated it would start expensing these items.
Economic news was disappointing Wednesday, with the Wholesale Trade report showing sales fell by 0.5 percent in May. This was well below estimates for a gain of 0.3 percent and added on to the 2.5 percent decline seen in April. Overall, economists feel that the overall economy cannot see significant improvement without strength in wholesale sales.
Though stocks didn’t gain ground on Wednesday, the CBOE Market Volatility Index ($VIX) fell 1.73 percent to 21.03, reaching an intraday low of 20.88. The VIX continues to tease the 20 level, but has yet to move below this key support area. Nonetheless, it is something to keep an eye on for a sign that a market top has developed in the short term.
Jody Osborne Senior Staff Writer & Options Strategist Optionetics.com ~ Your Options Education Site
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