Market wrap: Wall Street handed back nearly all of Tuesday's gains overnight as General Motors teetered and the rise in the cost of crude oil began to worry investors.
The Dow and S&P 500 fell around 2% after an afternoon slump. General Motors slumped 17% after it said not enough of its bondholders have agreed to swap their debt for stock, pushing it closer to bankruptcy. A sell-off in government bonds on over-supply concerns added to market woes.
Most US sectors finished in the red. The AMEX Airline Index fell 5% as oil hit a fresh seven-month high at $63.45, up 1.5%. Crude has since pulled back to trade recently at $63.11. Banks/financials fell 4-5% and REITs lost 4%.
Gold was clinging near its recent high but slipped in the last few hours to $949.90. Base metals lost altitude as the US dollar rallied for the third straight day. Nickel ran strongly in early trade but couldn't hold gains. Aluminium looks particularly gloomy as it slides ever closer to the old support level.
Our market didn't move much yesterday, so futures traders don't think it has to give back much today. The SPI closed 31 points lower at 3775.
Looks like a day for bounce trading. These big daily swings suggest considerable uncertainty about the next direction for global markets. The charts continue to look "toppy", with echoes of the sort of 'rounding tops' that marked the end of the last bull run. There could still be a breakout upwards but it's a good time to stay nimble and keep some cash on the sidelines, IMO.
