5 Things Everyone Should Know About Dow 20,000

Dow 20,000 – an incredible milestone! The Dow Jones industrial average is nearing the 20,000 mark for the first time, and when the barrier is broken, Americans watching the evening news, tuning in to the radio or aimlessly browsing the internet will see the headline, whether they care about it or not.

Should investors really care? Should anyone? And the answer is: yes and no.

Regardless of what importance level you assign to Dow 20,000, here are five things everyone should know about Dow 20k.

1. The Economy is Improving and so are Expectations

This one may be obvious, but with the Dow and other stock market indices at all-time highs, things are getting better. Over the last 81 months the private sector has added an impressive 15.6 million jobs, and in November the unemployment rate hit 4.6 percent for the first time since August 2007.

On top of that, when the Federal Reserve raised interest rates interest rates on Dec. 14, Chair Janet Yellen said the hike was “a reflection of the confidence we have in the progress the economy has made and our judgment that progress will continue … the economy has proven to be remarkably resilient.”

Consumer confidence also improved in November, reaching pre-recession levels once again. As expectations improve, you can generally expect to see the stock market rise as well.

2. The Dow Actually Isn’t a Great Reflection of the Business Landscape

If the first point was a little straightforward, this one may be the most misunderstood: The Dow is definitely not the best measure of how American businesses are performing. That 20,000 figure? That’s only based on the share prices of 30 of the largest companies in the U.S.

“The Dow represents 30 large stocks. The S&P 500 represents nearly 17 times that number,” says Kevin Barr, head of investment management at SEI, an investment management firm headquartered in Oaks, Pennsylvania. “Both the Dow and S&P leave out the mid- and small-cap companies that form much of the stock market, which comprises thousands of stocks. While the Dow is commonly cited as a benchmark, investors need to keep its size and scope in mind.”

On top of that, the Dow is a price-weighted average, which means that stocks with higher share prices carry more influence. Nevermind that this is an entirely arbitrary way to do things. Currently, Goldman Sachs Group (GS) carries the heaviest weight in the blue-chip index at 8.38 percent, while Cisco Systems (CSCO) has the lowest weight at 1.06 percent.

Thus, if CSCO jumps 10 percent after a great earnings report, but GS falls just 1.3 percent, the two cancel each other out as far as the Dow is concerned. This despite the fact that at $153 billion, Cisco is actually worth about $56 billion more than Goldman Sachs.

While the S&P 500 is a better measure of how corporate America is doing, a better measure still is the Russell 3000 and Wilshire 5000, which track thousands of smaller stocks and represent essentially the entire U.S. stock market.

Unlike the Dow, the S&P 500, Russell 3000 and Wilshire 5000 are all market capitalization-weighted.

3. Put Dow 20,000 in Perspective

Due to the power of compound interest, 100-point – or even 1,000-point – swings in the Dow don’t mean what they used to.

Think about it this way: The Dow first crossed the 1,000 mark in November 1972. It would take more than 14 years for the Dow to gain the next 1,000 points, which it accomplished when it first broke 2,000 in 1987. In contrast, the Dow hit 19,000 on Nov. 22, and is approaching 20,000 less than a month later.

So if you hear that the Dow went up or down 100 points in a day, don’t put too much stock into it. In 1972, that was a 10 percent move. Today, it’s a half-percent.

4. A Few Minor Changes in the Index’s Constituents Make a Huge Difference

Further adding to the arbitrary nature of the Dow, the index’s 30 constituents aren’t set in stone like many people might think.

Every few years or so, if it’s necessary, the index committee will add some new member(s) to the index; the incoming stocks will often replace stocks or companies that have been faring poorly or are losing influence.

Sometimes, those decisions can seriously hamper the index’s returns.

The Dow, for instance, added Intel Corp. (INTC) and Microsoft Corp. (MSFT) in late 1999, near the height of the dot-com bubble, only to see both crater over the subsequent year. It would take until 2014 for MSFT and INTC to regain their debut Dow levels.

The most recent Dow addition is Apple (AAPL), which replaced AT&T (T) in March of 2015. Since then, Apple is down 6 percent and AT&T shares are up 24 percent.

David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, says companies aren’t added to the index because their stock looks attractive. “We’re not picking stocks that we think are definitely going to go up. I know one guy who can’t pick stocks, and that’s me,” Blitzer says.

“With the Dow we’re looking for large, solid, stable companies,” he says. “Most of them if not all of them are household names, people know who they are, and it’s traditionally blue-chip companies.”

5. Just a Psychological Level

Finally: traders just like to see big, round numbers with lots of zeros after them, and investors do too. Crossing a level like Dow 20,000 has no fundamental importance, but technical and short-term traders, as well as trading algorithms, may put some stock in it.

Over time, we’ll be hitting a lot of these psychological marks, says Jon Ulin, a certified financial planner and managing principal of Ulin & Co. Wealth Management, a branch office of LPL Financial in Boca Raton, Florida.

“Since World War II, the Dow Jones index has averaged about 9 percent per year and will continue to do so hitting new highs over time. Just with a meager 7.2 percent annualized return, we should be ringing in a 40,000 Dow by 2027,” Ulin says.

It’s been 44 years since the Dow first hit 1,000 in 1972. If it takes 44 years for the next Dow 20-bagger, we’ll be ringing in Dow 400,000 in 2060 (which will be another election year).

 

 

 

 

Written by John Divine of U.S. News & World Report

Source: U.S. News & World Report

Welcome To The Strongest Month Of The Year For Equities Historically

The month of November is in the books. We came into the month with the longest Dow losing streak in 35 years and many concerns over the U.S. presidential election. In the end, the fears didn’t materialize and equities had a big move higher.

Here is a summary of what happened last month:

• November was a great month for equities, as the S&P 500 gained 3.4%—its best monthly gain since a 6.6% gain in March. It was the best return in November since a 5.7% bounce in 2009.
• As good as the month was for equities, it was that bad for bonds as rates spiked. The Barclays Global Aggregate Total Return Index was down 4% for the worst month on record going back to 1990.
• The S&P 500 went the entire month without a 1% drop, only the third time that has happened the past 20 years during November.
• Small caps had a huge month, as the Russell 2000 gained 11.0% for the largest monthly gain since a 15.0% jump in October 2011.
• During the month, the Russell 2000 (RUT) gained 15 consecutive days for only the fifth time since 1979, but the record of 21 straight green closes from 1988 remains safe.
• Turning to sectors*, financials gained 14.0%, for their best monthly gain since a 14.3% advance in October 2011. Industrials, energy, and materials all led as well. Utilities and real estate lagged as higher rates lowered demand for higher yielding assets. Consumer staples also lagged, as money rotated away from more defensive sectors.
• All four days of Thanksgiving week were green, something that interestingly has now happened in three consecutive election years.

December is known for many things, but from a financial point of view, the best thing might be that it has been a historically strong month for stocks. Per Ryan Detrick, Senior Market Strategist at LPL Financial, “December is the feel-good time of the year and Santa tends to come for equities as well, as no month is higher more often or up more on average. Not to mention the Dow has been lower each of the past two Decembers, and since 1896, it has never been lower three years in a row.”

12-01-16_blog_fig1

Here are some points to remember:

• December has been historically one of the strongest months for equities. Going back to 1950**, the S&P 500 has averaged a gain of 1.6% and been higher 76% of the time; both are the best out of all 12 months.
• When the S&P 500 has been up for the year heading into December, the average return in the month jumped to 2%. When the year has been down heading into the month, the average return dropped to 0.8%.
• The catch is the S&P 500 has been lower in December during the past two years for only the sixth time in history (going back to 1928). It has never been lower for three consecutive years.
• It is rare to see a large pullback during this month as well, as since 1950, the average return when the month is negative has been only -2.1%, the smallest loss out of all 12 months.
• Incredibly, since 1950, only once has the S&P 500 closed the month of December beneath the low close from the month of November.
• Going back to 1950, the S&P 500 has never had its weakest month of the year during the month of December. In fact, it has only had the 11th and 10th worst months of the year seven times.
• The last time December was the worst month of the year for the Dow was in 1916, when it dropped more than 10% during World War I.

 

 

 

 

IMPORTANT DISCLOSURES

Past performance is no guarantee of future results. The opinions voiced in this material are for general information only and are not intended to provide or be construed as providing specific investment advice or recommendations for any individual security. The economic forecasts set forth in the presentation may not develop as predicted. *As measured by S&P 500 sub-indexes. **The modern design of the S&P 500 stock index was first launched in 1957. Performance back to 1928 incorporates the performance of predecessor index, the S&P 90. Investing in stock includes numerous specific risks including: the fluctuation of dividend, loss of principal and potential illiquidity of the investment in a falling market. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a nondiversified portfolio. Diversification does not ensure against market risk. Because of their narrow focus, specialty sector investing, such as healthcare, financials, or energy, will be subject to greater volatility than investing more broadly across many sectors and companies. The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS, and CMBS (agency and non-agency). The Dow Jones Industrial Average Index is comprised of U.S.-listed stocks of companies that produce other (non-transportation and nonutility) goods and services. The Dow Jones Industrial Averages are maintained by editors of The Wall Street Journal. While the stock selection process is somewhat subjective, a stock typically is added only if the company has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors, and accurately represents the market sectors covered by the average. The Dow Jones averages are unique in that they are price weighted; therefore, their component weightings are affected only by changes in the stocks’ prices. The Russell 2000 Index measures the performance of the small cap segment of the U.S. equity universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. This research material has been prepared by LPL Financial LLC. 

 

 

Special Report on the Recent Market Volatility

Market Crash

The last 5 trading days (August 18th – 25th) have been crazy ones in the market, with the Dow Jones Industrial Average down 9.39%. Here are five key points to help you understand how Lake Avenue Financial has been managing their client portfolios during this time.

1. This market correction, long overdue, is exactly what Lake Avenue Financial’s proactive portfolios are built for. We have been prepared for this correction and have been cautioning against one for the last 6 months.

2. Our hedge positions and conservative allocations are working exactly as intended. Our long-term investments in gold and managed futures have helped smooth out the ride and have actually appreciated in value during this last week.

3. Our investments in municipal bonds and short-term bonds bolstered our actively managed portfolios. The fixed income portion also has been a great place for clients to wait as we realized a financial “storm” was on the horizon. We will maintain these positions till we feel that the “storm” has passed.

4. We will be utilizing the dollar cost averaging strategy to get back into the equity markets. This strategy allows us to purchase shares of any stock, mutual fund or ETF over a 3 to 6 month time frame. This way, we are not trying to time the market. Instead, our clients are getting an average price per share. Thus reducing the impact of volatility in the markets.

5. Lake Avenue Financial has partnered with the cutting edge technology at Riskalyze to help pinpoint our client’s acceptable level of risk and reward with unparalleled accuracy. This helps us ensure that our client’s portfolio aligns with their investment goals and expectations.This technology allows us to make the right financial decisions, manage their assets more efficiently and minimize the volatility in our client’s accounts. We invite you to click on the button below for your free portfolio risk analysis.

With your FREE Portfolio Risk Analysis, you’ll finally be able to answer questions like…

What is my Risk Number?

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What would happen to your portfolio if the 2008 crash happened again? Or how would the bonds in your account react in a rising interest rate environment?

 

If you want the answer to these questions and more, just click on the button below!

Stocks Close Up More than 1% Amid Greece Relief

© Katrina Tuliao, Flickr, Creative Commons
© Katrina Tuliao, Flickr, Creative Commons

U.S. stocks closed more than 1 percent higher in light volume trade Monday, following gains overseas on news of a bailout agreement between Greece and its creditors.

“I think it’s just a sigh of relief that it’s over, but let’s face it, they just kicked the can,” said Maris Ogg, president of Tower Bridge Advisors. “It seems like we kicked the can on a number of fronts. Earnings probably will be front and center int he next couple of weeks.”

About 11 stocks advanced for every 4 decliners on the New York Stock Exchange, with an exchange volume of 571 million and a composite volume of 2.8 billion as of 3:59 p.m. Average volume for the entire day is 3.4 billion.

“You’ve got a relief going on, short covering going on,” said Quincy Krosby, market strategist at Prudential Financial. “What you want for confidence buying is to see a market close with buying orders on the close.”

The Dow Jones industrial average traded about 220 points higher, with Microsoft and DuPont leading most blue chips higher. The index recovered recent losses to trade about 0.80 percent higher for the year.

The Nasdaq Composite jumped 1.5 percent as Apple and the iShares Nasdaq Biotechnology ETF (IBB) rose more than 1.5 percent.

The S&P 500 held near 2,100, led by a rise in information technology stocks and consumer discretionary’s 1.3 percent gain to an all-time high.

The Dow transports also briefly advanced more than 1 percent, with airlines leading gains.

“I think the market’s technically very oversold,” said Bruce Bittles, chief investment strategist at RW Baird. “The market’s poised to go up but to break this trading range (we’ve been in) since January you need to see volume pick up… number of stocks hitting 52-week highs expand.”

He said the S&P 500 breaking past 2,100 would be an encouraging sign.

European Council President Donald Tusk said early on Monday that euro zone leaders reached an unanimous agreement with Greece after all-night talks in Brussels to move forward with a bailout loan for the cash-strapped nation, provided Athens implement tough reforms.

“The jury’s still out on whether or not this is going to be accomplished,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

To receive this third bailout, Greece’s parliament must pass the new rules in areas such as privatization, labor laws and pension reforms by Wednesday. The 86 billion euro ($95.2 billion) in funds would come over three years.

In the meantime, euro zone finance ministers were expected to discuss Monday how to keep Greece financed before the bailout deal is reached. Athens faces a 7 billion euro repayment deadline on July 20 to the European Central Bank.

The ECB announced it maintains the emergency assistance cap for Greek banks, which will remain closed for at least two more days.

The Dow Jones industrial average futures were about 140 points higher before the open.

European stocks jumped on news of the conditional Greece deal, with the German DAX up about 1.5 percent and the STOXX Europe 600 up nearly 2 percent

In Asia, stocks surged with the Nikkei up 1.57 percent and the Shanghai Composite leaping 2.4 percent as it extended a recovery from a recent plunge.

Art Hogan, chief market strategist at Wunderlich Securities, said the domestic response will likely be less exuberant since the major averages ended last week little changed. Only the Dow eked out a gain, of a mere 0.17 percent.

Stocks rose slightly past their opening levels, while bond yields held steady. The U.S. 10-year note yield was 2.44percent and the 2-year held near 0.67 percent. The German 10-year bund yield fell to 0.85 percent.

The U.S. dollar extended gains with the euro dipping below $1.10.

Also in focus is the Iranian nuclear deal, which would allow more oil exports. Talks on a deal were extended past a June 30 deadline and are expected to reach a conclusion Monday.

Crude oil futures settled down 54 cents, or 1.02 percent, at $52.20 a barrel on the New York Mercantile Exchange. Gold futures fell $1.70 to $1,156.20 an ounce in afternoon trade.

No economic data or earnings of note were expected Monday.

Second-quarter earnings season gets underway with a slew of major reports on Tuesday that include JPMorgan Chase and Wells Fargo. On the economic front, retail sales are due Tuesday morning.

“Each data point in and of itself may not be important, but collectively they’re important, especially since there’s a premium on the data,” Krosby said.

Federal Reserve Chair Janet Yellen delivers her semi-annual testimony on the economy to Congress on Wednesday and Thursday.

“If she focuses on (international news and the dollar) that will give the market a huge boost because she’s more concerned about it than she suggested in her speech Friday,” Krosby said.

In other news, the United States posted a budget surplus of $51.8 billion in June, down 27 percent from the same period last year, the U.S. Treasury Department said on Monday.

The Dow Jones Industrial Average traded up 211, or 1.19 percent, at 17,972, with Microsoft and Caterpillar leading gains and Merck and UnitedHealth the only decliners.

The S&P 500 traded up 21 points, or 1.05 percent, at 2,098, with information technology leading nine sectors higher and utilities the only decliner.

The Nasdaq traded up 72 points, or 1.45 percent, at 5,070.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 14.

Written by Evelyn Cheng of CNBC

(Source: MSN)

Dow Closes Higher for the Week as Overseas Worries Fade

© Provided by CNBC
© Provided by CNBC

Stocks closed more than 1 percent higher Friday, recovering from a sharp selloff earlier in the week, as hopes for resolution in Greece and stabilization in China boosted sentiment.

The Dow Jones industrial average closed about 220 points higher. The index surged more than 200 points in the open as the major averages leaped nearly 1 percent or more. The Nasdaq Composite briefly gained more than 1.5 percent. The Dow transports also gained more than 1.5 percent led by airlines.

Apple traded nearly 3 percent higher, reversing a 2 percent plunge Thursday that took the stock close to its 200-day moving average.

“This has been a week where everyone worried about China and Greece and as we go into the weekend those big financial headwinds are less scary,” said David Kelly, chief global strategist at JPMorgan Funds. “There’s clearly more optimism that a a Greece deal (is reached).”

Greece’s banks will need an estimated 10 to 14 billion euros of fresh capital to keep them afloat and more time before they reopen even if a deal is reached with European creditors on Sunday, a senior Greek banker told Reuters on Friday.

Greece submitted new reform proposals late Thursday that creditors could evaluate as early as Friday. The parliament in Athens is also scheduled to vote on the proposals later in the day ahead of Sunday meetings of euro zone leaders.

Chinese stocks extended gains on Friday, jumping for a second day following government intervention amid hopes of a Greece deal. European stocks also advanced, with the DAX closing nearly 3 percent higher.

In domestic news, Fed Chair Janet Yellen said in prepared remarks the U.S. is still on pace for a rate hike this year and that fundamentals are solid and sees pickup in growth in the coming years.

“It confirms our belief that it will be a small hike and later this year,” said Mariann Montagne, senior investment analyst at Gradient Investments. She expects a hike in November or December.

Yields extended morning gains with the U.S. 10-year note yield at 2.41 percent and the 2-year yield at 0.65 percent. German 10-year bund yields leaped to 0.89 percent.

Earlier, Boston Fed President Eric Rosengren said in a Reuters report that the central bank might hike rates later this year as long as inflation firms and Greece and other international wildcards do not get in the way. He added that negotiations over Greek debt and a slowing Chinese economy were among the possible disruptions that could delay the beginning of tighter U.S. monetary policy, though they hadn’t altered expectations yet.

The U.S. dollar fell about half a percent, with the euro above $1.11.

“The likelihood of a Grexit has dramatically diminished,” said Doug Cote, chief market strategist at Voya Investment Management. “Despite the volatility, despite the noise from Greece we’re having good fundamental data coming out in (U.S.) housing. … The fundamentals continue to drive this market forward.”

In economic reports, U.S. wholesale trade inventories for May jumped 0.8 percent, soundly topping estimates for the fastest pace of growth in six months. April’s figure was unchanged, showing a 0.4 percent gain.

There are no major earnings due on Friday.

Stocks rallied sharply in the open Thursday but gave back the majority of their gains to close mildly higher as lack of resolution on Greece kept investors on edge.

“We were very oversold so it’s very important that we rally next week,” said Lance Roberts, general partner of STA Wealth Management. He’s watching to see if the S&P 500 can hold 2,078.

He expects a rate hike in September unless the situation in China worsens.

“The one thing that trips up markets is the story no one is talking about,” he said.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, fell below 17.

“There are a lot of things that can go wrong and I think the level of the VIX, even though it’s come down, indicates we still have a lot of uncertainty,” said Randy Frederick, managing director trading and derivatives at Charles Schwab.

About four stocks advanced for every decliner on the New York Stock Exchange, with an exchange volume of 414 million and a composite volume of nearly 2 billion as of 2:30 p.m.

High-frequency trading accounted for 49 percent of July-to-date’s daily trading volume of about 7.0 billion shares, according to TABB Group. During the peak levels of high-frequency trading in 2009, about 61 percent of 9.8 billion of average daily shares traded were executed by high-frequency traders.

Crude oil futures for August delivery settled down 4 cents at $52.74 a barrel on the New York Mercantile Exchange. Gold futures ended down $1.30 at $1,157.90 an ounce.

Gap reported a 1 percent drop in June same-store sales, more than the Thomson Reuters estimate for a 0.5 percent decline.

Barracuda Networks beat estimates by 1 cent with adjusted quarterly profit of 9 cents per share, with revenue also above estimates. However, gross billings—a sign of future demand—were well below Street forecasts.

Written by Evelyn Cheng of CNBC

(Source: MSN)

NYSE Trading Halted; Stocks Down 1% as China, Greece Weigh

© Provided by CNBC
© Provided by CNBC

Trading on the New York Stock Exchange in late-morning trade on Wednesday with U.S. stocks extending their losses as continued concerns about Greece and the extended selloff in the Chinese market pressured investor sentiment.

“We’ve had some technical malfunctions. Some may be related to connectivity with other exchanges. I believe we’re going to have a temporary pause certainly in a variety of stocks perhaps floor wide,” Art Cashin, director of floor operations at the NYSE, told CNBC, adding that the halt will not cause a move in a particular direction.

Other exchanges, however, continued trading normally. The NYSE later said that all open orders amid the halt will be cancelled.

“What happens with these situations is often you get a sort of residual result. You’re all clear or you get caught up to date and there’s a little bit of a backlog that pops up somewhere, and it tends to jam things up. So I don’t think any of us has quite enough information yet,” Cashin added.

The Dow Jones industrial average traded about 175 points lower when trading was halted as the major averages declined, with the Nasdaq Composite briefly off more than 1 percent as biotechs and Apple (AAPL) plunged more than 1 percent. The iPhone maker was also the worst performing stock in the Dow.

The S&P 500 struggled to hold gains for the year. The index dipped into negative territory Tuesday but recovered in afternoon trade to hold slightly higher for 2015.

“I think we’re just realigning the U.S. market with the declines elsewhere,” said Peter Boockvar, chief market analyst at The Lindsey Group.

In China, the Shanghai Composite closed nearly 6 percent lower despite supportive government measures. The index has fallen more than 30 percent from its mid-June peak amid frequent bouts of extreme volatility. Analysts say the turbulence is starting to unnerve regional investors.

“There was no real trigger until Chinese stocks became too pricey,” said Nick Raich, CEO of The Earnings Scout. “The trigger that sent this all off has been the Greece debt crisis.”

European stocks traded higher on Thursday amid hopes of a Greece deal. However, the indices are more than 2 percent lower for the week so far.

The Greek government has until Friday morning to present detailed reform proposals to allow a bailout deal by a Sunday summit.

Greek Prime Minister Alexis Tsipras addressed the European Parliament on Wednesday, lambasting Europe’s advocacy of austerity and the efficacy of Greece’s bailout programs since 2010, but promised a detailed, “concrete” deal would be presented in the next two to three days.

“Unfortunately the U.S. will remain headline-driven until earnings season which (starts) with Alcoa tonight,” Boockvar said. “Today will clearly be bullied around by headlines out of Greece.”

The Federal Open Market Committee (FOMC) minutes at 2 p.m. ET will also be in focus, with traders scanning the Federal Reserve’s June meeting report for hints on interest rate rise timing.

“I think the Fed minutes are something to watch closely,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab. But “usually the market doesn’t do much around the minutes until they’re released.”

The Dow Jones Industrial Average (.DJI) traded down 194 points, or 0.99 percent, at 17,583, with Intel leading decliners and Microsoft (MSFT) the only advancer.

The S&P 500 (.SPX) traded down 23 points, or 1.14 percent, at 2,057, with telecommunications leading all 10 sectors lower.

The Nasdaq (.IXIC) traded down 64 points, or 1.31 percent, at 4,931.

The CBOE Volatility Index (VIX) (.VIX), widely considered the best gauge of fear in the market, traded near 18.

About five stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 194 million and a composite volume of 1.22 billion as of 11:30 a.m.

Crude oil futures for August delivery lost 81 cents to $51.52 a barrel on the New York Mercantile Exchange. Gold futures rose $7.50 to $1,160.20 an ounce in morning trade.

Bond yields held lower, with the 10-year yield at 2.23 percent and the 2-year at 0.57 percent. The Treasury auctions $21 billion in 10-year notes this afternoon.

The U.S. dollar fell about half a percent against major world currencies as the euro gained to above $1.10.

Earnings season unofficially begins with aluminium producer Alcoa (AA) reporting after the market close.

Written by Evelyn Cheng of CNBC

(Source: MSN)

S&P Negative for Year, Dow Briefly Falls 200 Points Amid Greece

© Provided by CNBC
© Provided by CNBC

U.S. stocks fell nearly 1 percent or more on Tuesday, with the S&P 500 falling below its 200-day moving average, as investors awaited developments in the Greece debt crisis.

The S&P 500 fell below that key level for its first time since October 20, joining the Dow Jones industrial average in negative territory for the year. The blue chip index is about 1.5 percent lower for the year and traded about 140 points lower on Tuesday after falling more than 200 points.

“Investors want to get out, not just because of Greece but because there’s a lack of bullish impetus here,” said Adam Sarhan, CEO of Sarhan Capital.

The major averages opened higher but quickly turned lower, with the Nasdaq Composite underperforming and falling more than 1 percent.

“I think right now you’re in a situation where you’re waiting for new news,” said Ben Pace, chief investment officer at HPM Partners. “You can’t ignore what’s happening to (Greece).”

Euro zone leaders held an emergency summit in Brussels to discuss Greece.

Greece will submit a new aid proposal to European creditors “maybe” on Wednesday, euro zone officials said, with Athens’ European partners convening in Brussels for emergency talks.

However, the government’s latest proposals differ only slightly from previous versions, German media reported.

“Optimism over getting a deal done faded away here because the IMF is looking at Greece exactly the same as before,” said Art Hogan, chief market strategist at Wunderlich Securities. “We’re still very much held hostage to what’s next. The market will be hard-pressed to gather any enthusiasm.”

“The good news is, as we look at the selloff thus far, it could have been a lot worse,” he said.

Stocks closed mildly lower on Monday despite the Greek’s rejection of its creditors proposals in a Sunday referendum. However, the Dow Jones industrial average closed below its 200-day moving average.

“The major indices are retesting short-term support on weakness in the energy and materials sectors,” BTIG Chief Technical Strategist Katie Stockton said in a note. “An intraday trading range has formed and it is characterized by positive divergences that bode well for a breakout in the days ahead. We would add exposure once the S&P futures clear 2082 because it would affirm the short-term oversold “buy” signal that is in place per the daily stochastics.”

In U.S. economic data, May international trade numbers showed that the U.S. trade deficit widened, fueled by a drop in exports.

Bond yields continued to fall, with the U.S. 10-year yield (US10Y) below 2.20 percent and the 2-year yield at 0.56 percent. The German 10-year bund yield was 0.64 percent.

The dollar gained nearly 1 percent, while the euro hit a low of $1.0915, its lowest since June 2.

JOLTS job openings data came in slightly higher for May than the previous month. Consumer credit figures are due at 3 p.m. The U.S. Treasury is scheduled to hold a three-year note auction later in the day.

The Federal Reserve releases its meeting minutes Wednesday afternoon.

European shares also reversed to trade trade lower, while in Asia, Japan’s blue-chip Nikkei closed 1.3 percent higher and volatility continued to mark trade in Chinese stocks.

The benchmark Shanghai Composite fell more than 1 percent amid doubts that steps taken by Beijing in the past week would shore up battered stock markets.

Oil continued to decline, with U.S. crude futures near $50 a barrel on Tuesday—off more than 3 percent.

Companies reporting earnings this session include The Container Store (TCS).

Carnival (CCL) announced Tuesday that it gained approval from the U.S. government for limited cruises to Cuba as early as next year.

The Dow Jones Industrial Average (.DJI) traded down 180 points, or 1 percent, at 17,505, with UnitedHealth (UNH) and JPMorgan Chase (JPM) the greatest decliners and Procter & Gamble (PG) leading advancers.

The S&P 500 (.SPX) traded down 20 points, or 0.97 percent, at 2,048, with materials leading eight sectors lower and utilities and consumer staples leading advancers.

The Nasdaq (.IXIC) traded down 78 points, or 1.5 percent, at 4,915.

About three stocks declined for every advancer on the New York Stock Exchange, with an exchange volume of 294 million and a composite volume of 1.3 billion.

Crude oil futures fell $1.71 to $50.82 a barrel on the New York Mercantile Exchange. Gold futures fell $20.00 to $1,153.30 an ounce in late morning trade.

Written by Evelyn Cheng of CNBC

(Source: MSN)