Courtesy of John Nyaradi.
Stocks seesaw, give up early gains on fears over Europe, banks and airlines while U.S. consumers stay strong.
Major U.S. indexes gave up early gains to finish near flat line as the Dow Jones Industrial Average (NYSEARCA:DIA) gained +0.3%, the Nasdaq (NYSEARCA:QQQ) declined -0.5% and the S&P 500 failed to breach resistance at its 50 Day Moving Average and gained +0.2%.
Consumers led the charge early in the day on reports that consumer sentiment was sharply higher than expected for November and that “Cyber Monday” posted record online sales of $1.25 Billion, giving added strength to the all important consumer sector (NYSEARCA:XLY) which gained +.04%
Fed Vice Chairman Janet Yellen tried to soothe markets with comments that more quantitative easing was possible but financials (NYSEARCA:XLF) nevertheless declined -0.5% and were further rattled after hours with a downgrade from S&P hitting 37 major global banks. The list is a “who’s who” of major global banks including Bank of America, Citi, Wells Fargo, Morgan Stanley and Goldman Sachs.
Overseas, things remained uncertain in Europe with Italy (NYSEARCA:EWI) selling bonds at Euro lifetime highs of 7.9% for three year notes and 7.56% for ten year notes, both above the 7% level that is widely regarded as being unsustainable.
In Brussels, European finance ministers struggled yet again with how to contain the crisis and apparently will be looking to the International Monetary Fund (IMF) for help, along with the European Central Bank which has quietly started monetizing the Continent’s debt.
American Airlines (NYSE:AMR) declared bankruptcy and saw its stock dive 84% but the overall transportation sector (NYSERCA:IYT) gained +0.4% on the day.
Tomorrow comes Chicago PMI, the ADP Employment Report and the Fed Beige Book report of economic activity around the country.
Bottom Line: Technical indicators remain weak as the S&P 500 closed below the psychologically important 1200 level and European borrowing costs continue to stay at “unsustainable” levels. Facing ongoing headwinds, the U.S. consumer remains confident and hits record spending levels as we move into the important Christmas shopping season. Europe will continue to dominate and drag on equities for as long as its leadership dithers.
Disclaimer: Wall Street Sector Selector actively trades a wide range of exchange traded funds (ETFs) and positions can change at any time.
Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector
