Sellers Make Concerted Push Against Stocks

August 11, 2009

Tuesday started with modest losses, but sellers have intensified their efforts to push stocks toward their worst single-session percentage loss in one month. Financials have been the primary source of this session's weakness.

Tuesday started with modest losses, but sellers have intensified their efforts to push stocks toward their worst single-session percentage loss in one month... Financials have been the primary source of this session's weakness. The sector's current loss of 3.4% is worse than any other major sector in the S&P 500... MBIA (MBI 5.20, -0.97) is a primary laggard among financials after being hit with a downgrade by analysts at JPMorgan. CIT Group (CIT 1.17, -0.31) has made a precipitous drop following its decision to delay its quarterly filing. Though the pair is among the worst performers in the financial sector, general weakness among bank stocks is having the most adverse impact on the broader sector due to their collective market weight.

Currently, the KBW Banking Index is off by 4.5% in its worst percentage drop since June. The KBW is still up more than 7% month-to-date and up 19% since July 1, though... Weakness has been broad-based for the entire session as participants move to take profits, but defensive-oriented consumer staples stocks have managed to limit losses. The sector is down just 0.2% as tobacco stocks provide a boon to the sector... Still, the broader market is at session lows... Broader market participants haven't had any meaningful corporate announcements to guide their actions this session. Economic data hasn't had much of an overall impact on trading, either. Wholesale inventories fell for the tenth straight month by dropping a sharper-than-expected 1.7% in June.

Meanwhile, second quarter productivity increased a better-than-expected 6.4%, which was the strongest increase since the third quarter of 2003. As for unit labor costs during the second quarter, they fell 5.8%, which was sharper than expected and the steepest drop in eight years... Though the latest dose of data did little to move the hands of traders, the latest FOMC policy statement and rate decision, which are due tomorrow afternoon, are expected to provide participants with a key trading catalyst. Dow -1.2%, Nasdaq -1.4%, S&P 500 -1.4%