briefly

(Note the improved ratio of advances against declines altho close was southerly))

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3 hr 8 min ago

[BRIEFING.COM] What was shaping up to be a respectable bounce following a few more days of selling gave way to another disappointing ending for bulls when buying interest faded throughout the afternoon amid ongoing concerns about the pace of economic activity. When the closing bell rang, the major indices were at their lows for the day.

The market opened slightly higher as Tuesday's last-ditch effort to get stocks back on the buying track, based on the idea that recent selling was overdone, renewed hopes that yesterday's three-month low on the Dow (10,890) was in fact the bottom so many have been waiting for. Prices across the commodity complex, from oil prices falling 2.3% below $71 a barrel and gold prices hitting a six-week low, provided some early relief while investors sifted through another batch of Fed speak.

Former Fed Chairman Greenspan appeared before the Senate Foreign Relations Committee to discuss oil and the economy. Although the market was attentive to Greenspan's comments, they ultimately carried little sway since they didn't have anything to do specifically with monetary policy. Greenspan did note, however, that American households are struggling with rising gas prices - an admission that played into the argument of pundits calling for the Fed to pause at its June FOMC meeting.

The latter point notwithstanding, more hawkish inflation talk from current Fed members, this time from Atlanta Fed President Guynn, and an early-afternoon Anthrax scare in the U.K., provided the perfect excuses to get back to doing what a nervous market fearful of the Fed going too far with its tightening efforts has done for several weeks -- sell.

Despite oil prices slipping for a second straight day, following an unexpected build in weekly crude supplies and eased concerns about Iran's nuclear ambitions, Energy shaving more than one-third of its year-to-date, leading 9.2% performance was the biggest drag on the market. The Materials sector was another sore spot, shedding more than 2.0%. A rebound in the greenback prompted more profit taking in dollar-denominated commodities while concerns over a slowing economy, which led to analyst downgrades on DuPont (DD 41.13 -1.04) and Dow Chemical (DOW 39.09 -0.49), were felt by the entire market.

Technology extending its reach into negative territory for the year, amid further deterioration in semiconductors, also played havoc with bargain hunters' modest attempts to scoop up underperforming stocks. Intel Corp (INTC 17.39 -0.40) flirting with three-year lows, amid ongoing growth concerns, more than overshadowed the Semiconductor Industry Association's news that it is raising its forecasts for chip sales by 9.8% (from 7.9%) to $249.6 bln for 2006. EMC Corp (EMC 12.10 -0.25) saying that full-year revenues will be toward the low end of previous guidance didn't help much either. On Tuesday, we lowered our rating on Technology to Market Weight due to the poor market sentiment that has resulted from the fear that the Fed may go too far with its tightening efforts and produce a sharp slowdown in economic growth.

Despite weakness throughout the Treasury market, after Guynn became the fourth Fed official to echo Bernanke's firm stance on the need to fight inflation, the rate-sensitive Financials sector turned in a respectable performance. Nonetheless, until the Fed policy outlook becomes more clear, perhaps when PPI and CPI data are released next week, the market is not likely to make a major move upward.
NYSE Adv/Dec 1287/1944...Nasdaq Adv/Dec 1356/1659