Courtesy of John Nyaradi.
Tech sector led the fadeout which began before noon.
The euro strengthened against the dollar on Tuesday, as a result of a successful Spanish bond auction. The weakened dollar gave the S&P 500 the opportunity to climb above 1,426 on Tuesday morning, bringing the index to its highest level in four years. Unfortunately, at 10:41 EDT the Nasdaq began a steady slide downward, taking the other indices along with it. By 11:20 both the Dow and the S&P had established southbound trajectories. A number of theories about the decline were offered, although dollar strength was not among them. The dollar remained consistently weak throughout the session (NYSEARCA:UUP).
Ultimately, Apple (NASDAQ:AAPL) was blamed for the selloff. After all, the Nasdaq Composite led the decline and the Nasdaq always follows Apple’s performance. Therefore, Apple’s 1.37 percent decline became the excuse for the slump by all of the major indices. Ironically, it was Dell (NASDAQ:DELL) rather than Apple which had bad news on Tuesday. If anything, the news that Apple’s patent infringement case against Samsung will be going to the jury on Wednesday should cause an advance in Apple’s share price. On the other hand, Dell’s quarterly earnings of 42 cents per share missed the 45-cent estimate and they were a long way from last year’s 48 cents. Dell finished the session with a loss of 1.75 percent.
At the closing bell, the Dow was down by 68 points to 13,203 for a loss of 0.51 percent. The S&P 500 declined by 0.35 percent to close at 1,413 (NYSEARCA:SPY). The Nasdaq slid 0.29 percent to finish at 3,067 (NASDAQ:QQQ). The Russell 2000 slipped 0.14 percent to end the day at 815 (NYSEARCA:IWM).
The major European stock indices had established a bullish mood for Tuesday’s opening bell in New York, after Spain successfully auctioned €4.51 billion in short-term bonds earlier in the day. The Euro STOXX 50 Index finished Tuesday’s session with a 0.94 percent gain to 2,489 (NYSEARCA:FEZ). The FTSE 100 Index rose 0.57 percent to 5,857 (NYSEARCA:EWU). The German DAX Index surged 0.77 percent to 7,087 (NYSEARCA:EWG). France’s CAC 40 Index jumped exactly 1.00 percent to 3,515 (NYSEARCA:EWQ). Spain’s IBEX 35 Index made an identical, one-percent advance to 7,544 (NYSEARCA:EWP). Italy’s FTSE MIB Index skyrocketed 2.13 percent to 15,291 (NYSEARCA:EWI).
European ETFs had a mixed day on Tuesday. The SPDR Euro STOXX 50 ETF (NYSEARCA:FEZ) jumped 1.13 percent, a tad better than the performance of the STOXX 50 Index. The iShares Germany Index (NYSEARCA:EWG) made an identical move, finishing with a gain of exactly 1.13 percent. The iShares Spain Index (NYSEARCA:EWP) posted a gain of 0.66 percent and the iShares Italy Index (NYSEARCA:EWI) slightly outplayed the move by the FTSE MIB Index with a 2.17 percent jump.
As of 6:38 p.m. EDT, the euro declined 0.06 percent against the dollar, trading at $1.2465 (NYSEARCA:FXE).
Wednesday brings us the Existing Home Sales report from the National Association of Realtors as well as the minutes from the FOMC meeting of July 31 – August 1. Quantitative easing fans will have their decoder rings at the ready when the clock strikes two.
Bottom line: After Dell missed its quarterly earnings estimate, the Nasdaq slid into the red, taking the other stock indices along with it and leaving Apple with the blame.
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