Dow Jones Industrials, S&P 500 Lose Five For Five

Dow Jones Industrial Average and S&P 500 go five for five in the red column as worries mount over Europe, earnings and no immediate change in Federal Reserve monetary policy.

Two major U.S. stock indexes lost ground for the fifth day in a row as the Dow Jones Industrial Average (NYSEARCA:DIA) dropped 49 points and S&P 500 (NYSEARCA:SPY) finished fractionally lower.

This is the longest losing streak in two months and was largely generated by concern over European debt problems, continuing downgrades of earnings by U.S. corporations and apparently no help forthcoming in the near future from the U.S. Federal Reserve.

The Dow Jones Industrial Average (NYSEARCA:DIA) slipped 0.40%, the Nasdaq Composite (NYSEARCA:QQQ) dropped 0.50%, and the Russell 2000 (NYSEARCA:IWM) declined 0.40% in a red letter day for all major U.S. stock indexes and their associated ETFs.

Several big dampers dragged on today’s markets:

The Federal Reserve shied away from any more stimulus in the near future and this was a huge disappointment as global players are practically begging for more central bank intervention to keep markets afloat.

Mammoth Lakes, Stockton and San Bernardino, California have all filed for bankruptcy within the last few days as municipal bankruptcies seem to be a spreading epidemic in The Golden State. On the other end of the country, public service workers including police, fireman and city employees in Scranton, Pennsylvania, are suing their city after the Mayor cut everyone’s salary to minimum wage scale of $7.25/hour, saying the city doesn’t have the money to pay them. To the Mayor’s credit, he and the City Council endured the same pay cut, however, this spate of financial crises at the municipal and state level bodes ill for the future as these governments grapple with ongoing budget shortfalls generated by high unemployment and declining tax revenue.

In individual stocks, Best Buy took a huge hit in its ongoing efforts to return to former glory with its stock plunging 8.4%, and tech sector darling, Google, shed 1.8% on concern over its upcoming earnings report due on July 19th. Other worries have surfaced regarding Advanced Micro Devices, Applied Materials, Starbucks and Ford as S&P 500 (NYSEARCA:SPY) earnings might post their first overall decline in more than three years.

On the commodity front, 26 states have been declared disaster areas due to the blistering heat and drought afflicting the Midwest, with 1,000 counties included in the largest such declaration in history. The area covers approximately 30% of the United States which is a shocking figure and certainly not what Nat King Cole had in mind when he penned his classic 1963 album, “Those Lazy, Hazy, Crazy Days of Summer.”

Finally, at the Farnborough International Airshow in England, Airbus reported sagging demand for its A380, the world’s largest jumbo passenger jet, due to high fuel prices and declining global demand.

Bottom line: Global economic conditions remain treacherous as problems in Europe continue, the Fed has yet to step up to the plate, earnings decelerate and economic reports remain glum. Danger always brings opportunity and we will likely see plenty of both in the days and weeks ahead.

Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.