Commenting on Bank of America Corp (NYSE:BAC)’s shares plunge and today’s trading Gorilla Trades strategist Ken Berman said:
The major indices are all trading lower at midday following an active overnight session that saw wild moves in Chinese assets which triggered a jump in volatility on Wall Street too. The continued diplomatic escalation between the Asian giant and the U.S. put pressure on Chinese assets, and the mixed economic releases added to the volatility as well. Corporate earnings were mixed this morning, as even though Johnson & Johnson (JNJ), Abbott Labs (ABT), and of Bank of America (BAC) all beat estimates across the board, the mega-cap bank’s shares plunged in early trading because of the bank’s gloomy outlook regarding credit losses.
We also had a busy morning of domestic economic releases, and overall, the indicators leaned bullish. That said, the weekly number of new jobless claims remained close to 1.3 million while the number of continuing claims still stands at 17.3 million making investors doubt the quick job market recovery. The much better-than-expected retail sales, core retail sales, and Philly Fed Index, and the NAHB Housing Market Index were all great news for bulls, just as the fact that there were no major revisions in last month’s very strong figures.
Dow: 26,794, - 76 or 0.3%
S&P 500: 3,199, - 22 or 0.7%
Nasdaq: 10,380, - 170 or 1.6%
Russell 2000: 1,469, - 9 or 0.6%
Market breadth has been in line with the performance of the major indices, with decliners outnumbering advancing issues by a 3-to-2 ratio on the NYSE at midday. Only 2 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 57 stocks hit new 52-week highs. The major indices have been hovering around their daily VWAPs (Volume-Weighted Average Price) throughout the morning session, pointing to a mixed and choppy afternoon. The sector continues to show relative weakness for the fourth day in a row, with the previous leaders of the rally struggling to bounce back, while real estate and healthcare stocks have also been lagging this morning and only industrials and utilities are clearly in the green at midday in the nervous environment. Stay tuned!