Stock Market Update

[BRIEFING.COM] Volatility returned to the market this week, with a sharp 3% drop in the S&P 500 on Thursday and big swings in the major averages today. However, looking at the end result the picture is less dramatic, as S&P 500 declined just -0.7% on the week. The increased volatility has stemmed from sovereign debt concerns centered around the more fiscally troubled European nations such as Portugal, Spain and Greece. This uncertainty pressured overseas markets over the past two days, and resulted in strength in the dollar.

The dollar has played a key role in the market action of the past two days, with dollar-denominated assets exhibiting a strong inverse relationship with the currency. This was very evident in this afternoon's strong rebound, as a pullback from 6-month highs in the dollar index coincided with a sharp short-covering rally that erased triple-digit losses in stocks. Technical levels have also played a role in the end-of-week action, with the S&P 500 managing to hold its 200-day exponential moving average after slicing through key support levels yesterday.

Looking at today's action more closely, stocks attempted to trade higher ahead of the opening bell, despite the worse-than-expected January Employment Report. The report showed that 20,000 nonfarm jobs were lost in January, worse than the consensus expectation for a gain of 15,000 jobs. However, a pullback in the headline unemployment rate to 9.7% from 10.0% proved a silver lining for some. While buyers temporarily had control as the dollar eased off morning highs, strength in stocks was short-lived. After declining as much as 1.8% during the first half of the day, the market was able to erase triple-digit losses (the DJIA rebounded over 170 pts) in a late-day short-covering spike that coincided with a pullback in the dollar.

Looking out to next week, earnings season continues but there are fewer major names scheduled to report, with only two Dow components (DIS & KO) due out during the week. Volatility could remain elevated as the market continues to digest macro factors and growing uncertainty. ..Nasdaq 100 +0.8%. ..S&P Midcap 400 +0.2%. ..Russell 2000 +0.6%.

[BRIEFING.COM] The US Dollar Index trended lower toward the end of today's session, which allowed most of the commodity complex to recover some of the day's losses. However, the CRB Commodity Index closed down 5.12 at $258.55, just above today's lows.

March crude oil fell over $3 per barrel in late morning activity to session lows of $69.50 per barrel, its lowest level since mid-December. Crude recovered more than half of the day's losses in the afternoon session as the dollar remained on a steady decline at the same time. By the end of pit trading, crude closed 2.7% lower at $71.19 per barrel. March natural gas was choppy today, putting in highs of $5.598 per MMBtu in the early morning session. The energy component couldn't hold its gains and fell into negative territory in the afternoon, but rallied back near session highs, closing at $ 5.518, up 1.9%.

Precious metals were weak all session. April gold remained in the red for most of today's session, hitting lows of $1044.50 per ounce. It recovered some losses on weakness in the dollar, but still closed 0.9% lower at $1053.20 per ounce. March silver traded in negative territory all session, hitting lows ($14.65 per ounce) around the same time as gold. The precious metal also managed to recovere a portion of its losses, but still closed in the red, down 3.1% to $14.88 per ounce.

[BRIEFING.COM] As we head into the final hour of trading for the week, the major averages continue to extend higher, with losses now under 1% for each index. Still, today's losses would put the S&P 500 at the lowest levels since November of 2009. Stength in semiconductor stocks is helping the Nasdaq to outperform on a relative basis. 

News flow has subsided as the afternoon progresses. The was some commentary of interest from the Fed's Hoenig, who stated that the timing of a rate hike depends on the economy, but that we also "don't want to end up with a new asset bubble down the line."

[BRIEFING.COM] While the major averages are still well into the red, they are pushing off the intraday lows set at about 2:00 ET. The Nasdaq continues to outperform the other indices, currently down less than 1%.

In terms of specific sectors, the Industrials continue to put in signficant losses, down about 2%. Stocks such as Deere (DE 48.69 -1.18), Boeing (BA 57.53 -1.79), and CH Robinson (CHRW 51.54 -1.71) are showing particular weakness.

[BRIEFING.COM] The stock market has extended its afternoon slide to a fresh session low. Stocks are currently on track for their third straight loss and a weekly loss of 2.5%. That would mark the stock market's fourth straight weekly decline, during which time stocks have lost 8.6%.

Though the latest leg down has been broad based, industrial stocks and energy stocks are the weakest. Both sectors are down 2.4% at the moment. Meanwhile, pressure is least intense in the tech sector, which is currently down 0.4% as semiconductor-related names like Broadcom (BRCM 28.72, +1.01) and Applied Materials (AMAT 11.92, +0.12) show resilience. Their strength has also kept the Philadelphia Semiconductor Index (unch.) out of negative territory.

[BRIEFING.COM] Sellers have intensified their efforts to send the stock market to a fresh session low, which also marks a new three-month low. The move has been broad based with all 10 major sectors in negative territory.

Though the stock market has traded in choppy fashion this session, its intraday bounces haven't really marked any sign of real support. Instead, many dip buyers that kept the market's downward moves short and shallow during the past few months have shown little life in recent sessions.

[BRIEFING.COM] Stock market participants are still in selling mode after the previous session's 3% slide. Meanwhile, six-month highs for the dollar have kept dip buyers from offering support.

Stocks attempted to make a bit of a gap up ahead of the opening bell as it was learned that 20,000 nonfarm jobs were lost in January. The consensus had called for the addition of 15,000 jobs during the month, but many expected a worse reading since Thursday's weekly jobless claims tally saw a spike in initial claims. A pullback in the headline unemployment rate to 9.7% from 10.0% also proved pleasing.

Still, the data only temporarily swayed the mood of participants toward something more positive, while a bounce by the buck rekindled pessimism among participants. The greenback's current 0.6% gain against competing currencies has the Dollar Index at a fresh six-month high.

The dollar's strength has been particularly troublesome for oil prices, which are currently down 3.5% to $70.55 per barrel. With participants inclined to sell and oil prices down, energy stocks are currently this session's worst performers. As such, the energy sector is down 1.6%.

After a slight pullback this morning, the Volatility Index, or VIX, has made its way back above its 200-day moving average. It is currently up 2.3% to 26.7.

[BRIEFING.COM] The Nasdaq has made its way back to the neutral line, thanks to the relative strength of large-cap tech issues. However, the broader market remains in the red as 70% of its components are mired in weakness. Though that's a large proportion of declining issues relative to advancers, it isn't as lopsided as the previous session, when more than 95% of the components in the S&P 500 logged losses.

Ongoing weakness in the broader equity market has propped up Treasuries. In turn, the benchmark 10-year Note is up another nine ticks this session. That has its yield to a two-month low.

[BRIEFING.COM] The Dow and S&P 500 recently retreated to fresh session lows, but the Nasdaq has yet to come back in touch with the low levels that it set in the early going.

Energy stocks have dropped to a 1.9% loss as oil prices come under increased pressure. Oil prices were last quoted at $70.15 per barrel, down 4.1%, after a brief dip below the $70 per barrel mark. Oil prices haven't been that low since mid-December. They are now down approximately 15% from their 52-week high, which was set in January.

After a slight pullback this morning, the Volatility Index, or VIX, has made its way back above its 200-day moving average. It is currently up 1.9% to 26.6.

[BRIEFING.COM] The financial sector has surrendered most of its gains from the early going, but is still up 0.3% for the session. Specialized finance companies (+2.7%) remain in favor, but diversified financial services players (-0.4%) like JPMorgan Chase (JPM 37.89, -0.46) are relatively weak. Shares of JPM are at a fresh six-month low and are now trading just above a key support zone.

Meanwhile, the greenback has continued its gradual advance, such that the Dollar Index is now up 0.6% to a fresh session high and a fresh six-month high, for that matter.

The dollar's gains have exacerbated selling against oil prices, which are now down 2.8% to $71.50 per barrel.

[BRIEFING.COM] Stocks have bounced back from their morning drop, but the broader market remains rather mixed.

Materials stocks have made their way to a 1.0% gain, which is a better gain than that of any other major sector. The move comes as diversified metals and miners stocks spike to a 2.4% gain. Forest products are weak, though. That's largely the result of an earnings miss by Weyerhaeuser (WY 39.21, -1.18). The stock is presently a primary laggard in the materials sector.

Large-cap tech is also trading with relative strength. Gains by shares of Apple (AAPL 193.78, +1.73) and Cisco (CSCO 23.55, +0.39) have helped the Nasdaq Composite take a lead over its counterparts. Cisco's advance marks an extension from its gain in the previous session, when it was the only Dow component to book a gain.

[BRIEFING.COM] The US Dollar Index has rallied back near session highs, which has put pressure on most commodities.

March crude oil popped to morning highs of $73.94 per barrel around the open of pit trading. However, the energy component has pulled back to the unchanged line on the strength of the dollar and is currently at $73.14 per barrel. March natural gas has traded in the black all session and continues trading near recently hit highs of $5.598 per MMBtu despite the recent strength in the dollar this morning. Currently, natural gas is trading at $5.567 per MMBtu, up 3.0%.

Outside of the energy markets, precious metals are seeing weakness due to the dollar. March silver pushed down to fresh session lows of $14.875 per ounce in recent trade and is currently 1.9% lower at $15.055. Gold also remains in negative territory and is currently 0.4% lower at $1059.20 per ounce.

[BRIEFING.COM] This session's choppy start has given way to a broader pullback that has taken every major sector, save financials (+0.6%), into the red. Losses are steepest among industrials and consumer discretionary plays, which are down 1.2% and 1.1%, respectively.

The recent retreat puts the Dow below 10,000 and at its lowest point in roughly three months. Its downturn comes as the greenback extends its gains against competing currencies. The move has the Dollar Index up 0.4% to a fresh six-month high. The buck is now up 3.1% year-to-date, which makes it one of the best performing assets so far this year -- oil is down 8% this year; gold is down 3.3% in 2010, and the broad-based S&P 500 has lost 5.0% since the new year.

Early movers: Trading up -- ARG +42.6%, PWER +20.3%, BEBE +15.5%, SOMX +13.8%, SFLY +12.7%, BEZ +12.2%, OPTR +9.8%, ALKS +8.8%, CTCT +8.7%, PKI +7.5%; Trading down -- PFWD -26.3%, EGOV -25%, DMAN -11.2%, TTMI -10.2%, APD -9.7%, BPSG -9%, XTEX -7.9%, VRNM -6.7%, AOD -6.3%, AIXG -5.5%

Advancing Sectors: Financials (+0.6%)
Declining Sectors: Industrials (-1.2%), Consumer Discretionary (-1.1%), Energy (-1.0%), Utilities (-0.8%), Telecom (-0.5%), Tech (-0.4%), Consumer Staples (-0.3%), Materials (-0.3%), Health Care (-0.2%)

[BRIEFING.COM] Stocks jumped out to a solid gain in the first few minutes of trade, but pressure has since picked up to pull the broader market back a bit. Stocks now trade in mixed fashion.

Of the 10 major sectors in the S&P 500, financials currently look the strongest. The sector, which was the worst performer in the previous session with its 4.2% loss, is up 1.0% at the moment. Its relative strength stems from diversified banks (+1.6%) and specialized financial services stocks (+1.5%).

 [BRIEFING.COM] S&P futures vs fair value: -0.90. Nasdaq futures vs fair value: +6.80.  January nonfarm payrolls fell unexpectedly, but the headline unemployment rate has slipped from 10.0% to 9.7%, which marks the lowest level since August. Meanwhile, the U.S. dollar has pared some of its early morning gains against competing currencies. That has helped improve the tone among premarket participants, but a mixed start for the major equity averages still looks to be in order.

 [BRIEFING.COM] S&P futures vs fair value: +2.50. Nasdaq futures vs fair value: +9.00.  U.S. stock futures have bounced higher and now point to a solid start, but European markets remain weak. As such, Germany's DAX is down 0.8%. The country's industrial production unexpectedly declined 2.6% in December. Engineering giant Siemens (SI) is a primary source of weakness at the moment. Daimler (DAI) is also weak, though it was upgraded by analysts at RBS. In France, the CAC is down 2.1% amid wide-spread weakness. Of its 40 members, only Suez Environnement is the only name to trade higher. Total (TOT) and BNP Paribas currently lead losses. Meanwhile, Britain's FTSE is down 1.1% as 90% of its components reside in the red. Natural resource plays BG Group, Rio Tinto (RTP), Xstrata (XTA), and Royal Dutch Shell (RDS.A). BG Group recently missed earnings expectations, while Royal Dutch Shell's disappointment came earlier this week. In Asia, the MSCI Asia Pacific Index fell 2.6% and Japan's Nikkei tumbled 2.9%. Shares of Toyota (TM) managed to steady their fall, despite continued recall woes. Mitsui (MITSY) and other resource-linked shares took a beating, but Sony (SNE) edged up after it halved its annual loss forecast. After the bell, Panasonic (PC) said its quarterly profit spiked. In Hong Kong, the Hang Seng dropped 3.3%, which put its shares to a five-month low. In mainland China, the Shanghai Composite lost 1.9%.

 [BRIEFING.COM] S&P futures vs fair value: -2.00. Nasdaq futures vs fair value: +4.80.  Stock futures are mixed after some whipsaw action in the minutes that immediately followed the latest official jobs figures. Specifically, nonfarm payrolls fell by 20,000 in January, but that was a disappointment since the consensus had called for the addition of 15,000 jobs during the month. The change in payrolls for December was revised downward to reflect a loss of 150,000 jobs. Despite the negative numbers, the official unemployment rate now stands at 9.7%, which is better than the consensus call for an unemployment rate of 10.0% and down month-over-month from 10.0%. Average hourly earnings for all employees increased 0.2% month-over-month, while average weekly hours of work for all employees totaled 33.9 hours. Average hourly earnings for production increased 0.3% month-over-month and average weekly hours of production increased to 33.3 from 33.2.

 [BRIEFING.COM] S&P futures vs fair value: -5.40. Nasdaq futures vs fair value: +0.30.  The stock market logged its worst single-session percentage loss in nine months on Thursday, but at the moment there isn't any sort of rebound taking shape. In fact, stock futures point to a moderately lower start for the broader market as global participants continue to rotate into the dollar, which has put the Dollar Index up 0.3% to a fresh six-month high this morning, amid considerable weakness in overseas markets. However, the wild card this morning is the nonfarm payrolls report, which is due at the bottom of the hour.

 [BRIEFING.COM] S&P futures vs fair value: -5.70. Nasdaq futures vs fair value: -2.30.  

[BRIEFING.COM] FTSE...5051.03...-88.20...-1.70%. DAX...5453.69...-80.80...-1.50%.

[BRIEFING.COM] Nikkei...10057.09...-298.90...-2.90%. Hang Seng...19665.08...-676.60...-3.30%.

[BRIEFING.COM] Woes over the fiscal health of select European nations and some disappointing jobless claims numbers fueled a selling frenzy that culminated in the market's worst single-session percentage loss since April.

Concerns for the fiscal health of Portugal, Greece, and Spain in the wake of some tepid bond auction results stirred early selling interest, which intensified with news that initial jobless claims for the week ended Jan. 30 increased more than expected week-over-week to 480,000. Continuing claims remained steady week-over-week at 4.60 million, but that was still higher than the consensus call for 4.58 million continuing claims.

Disappointment over the headlines led global participants to seek safety in the dollar, which spiked 0.7% to a new six-month high.

Participants wanted little to do with equities, though. In turn, 97% of the issues listed in the S&P 500 logged a loss, which drove the broad-market measure to its lowest close in nearly three months. Meanwhile, the Dow Jones Industrial Average dipped below 10,000 for the first time since early November, but settled just above that psychologically significant line. Cisco (CSCO 23.16, +0.09) was the only Dow component to book a gain, thanks to its better-than-expected earnings and strong guidance.

Visa (V 83.05, -0.47) also exceeded earnings expectations and reaffirmed its outlook for growth, but its shares rolled over from a strong gain in the early going to join peer MasterCard (MA 222.11, -25.47) in the red. MasterCard missed Wall Street's consensus earnings estimate for the latest quarter. The stock was one of the weakest names in the financial sector, which fell 4.2%, worse than any other major sector.

Natural resource plays had been among the poorest performers for most of the session. Their losses were linked to broader market weakness and sharp losses in the commodity complex, which dragged down the CRB Commodity Index to a new three-month low and a 2.6% loss for the session.

Weakness among commodities was broad based as oil prices plummeted 5.0% to $73.14 per barrel. Prices haven't fallen by such a sharp percentage since summer. Meanwhile, gold prices were pushed 4.3% lower to $1064 per ounce -- December marked the last time that gold fell by more than 4%.

Volatility spiked amid this session's sell-off. That resulted in a near 21% rise in the Volatility Index, which is often dubbed the VIX, or more ominously the Fear Index.

Retailers mostly made up the handful of names to book gains in the broader market. That was largely the result of several upbeat same-store sales reports for January. Still, retailers fell a collective 2.3%.

As if the breadth of this session's slide wasn't telling enough of conviction, trading volume on the NYSE came close to 1.5 billion shares, which is well above its 50-day and 200-day moving average.

While this session's sell-off will weaken sentiment in the broader market, participants still have yet to see the latest nonfarm payrolls report, which often brings volatility all on its own. The nonfarm payrolls report for January is scheduled to be released Friday morning at 8:30 ET.

Advancing Sectors: (None)
Declining Sectors: Financials (-4.2%), Energy (-3.9%), Materials (-3.8%), Industrials (-3.1%), Tech (-2.9%), Consumer Discretionary (-2.9%), Utilities (-2.6%), Health Care (-2.6%), Telecom (-2.4%), Consumer Staples (-2.3%)

..Nasdaq 100 -2.9%. ..S&P Midcap 400 -3.2%. ..Russell 2000 -3.4%.