Dow Jones Review : Stocks Retreat as Moody's Downgrade Rains on Fed-Induced Parade

By : Tokan Corner

Stocks Retreat as Moody's Downgrade Rains on Fed-Induced Parade

 

The bulls and bears battled it out today, with U.S. stocks spending time on both sides of the breakeven line. In early trading, investors digested a successful auction of Italian bonds and efforts to expedite the country's budget cuts, as well as easing concerns about a potential Greek-bond default. On the home front, meanwhile, Alcoa (AA) unofficially launched the second-quarter earnings season -- though the blue chip's finish in the red could bode ominously, from an historical standpoint. Later in the session, the Federal Open Market Committee's (FOMC) meeting minutes fueled buzz of additional stimulus measures on the horizon -- though the scales were only briefly tipped the bulls' favor. Instead, Moody's late-session downgrade of Ireland's bond ratings rained on Wall Street's short-lived parade, with the major market indexes succumbing to an eleventh-hour sell-off.

 

In the final 90 minutes of trading, the Dow Jones Industrial Average (DJIA – 12,446.88) plunged from an intraday acme of 12,570.58 to end at a session low -- more than a 120-point span. By the time the dust settled, the blue-chip barometer shed 58.9 points, or 0.5%, to end beneath the 12,500 level for the first time in July. Furthermore, the Dow compromised its 10-day moving average for the first time since June 24. Only four of its 30 components ended higher, with Cisco Systems (CSCO) leading the elite with a 1.1% gain. Meanwhile, Boeing (BA) paced the bearish majority, giving up 1.9% by the close.

 

The S&P 500 Index (SPX – 1,313.64) suffered a similar fate, surrendering 5.9 points, or 0.4%, to settle at a session nadir. Meanwhile, the Nasdaq Composite (COMP – 2,781.91) fared the worst of the three, shedding 20.7 points, or 0.7%, to finish beneath both the 2,800 level and its own 10-day trendline.

 

Levels to Watch in Trading:

·         Dow Jones Industrial Average (DJIA – 12,446.88) - support at 10,500; resistance at 13,000

·         S&P 500 Index (SPX – 1,313.64) - support at 1,100; resistance at 1,400

·         Nasdaq Composite (COMP – 2,781.91) - support at 2,600; resistance at 3,000