On Monday the NYSE posted losses that averaged around 4% after six weeks of positive trade came to a sliding halt over fears that the consumer may weigh heavy on the financial sector after Bank of America increased provisions for bad debt. The earnings report from the BOA was overshadowed by a massive increase in bad loan potential, and that was enough to send the bank lower by over 20%.
The financial sector then followed suit and started a momentum play that just could not stop itself until it too had wiped out a huge swath of value that stretched across all banking sectors. It was the financial sector move that seemed to give the markets a second wind to continue to buy the Usd, and seemed to intensify the buying of bonds and Treasury notes.
The net result was an average volume day was allowed to drop the S&P to a main support area at the 20 day Simple Moving Average around the 833 area, a price point that may now create a swing area for the week. Getting up and through it will likely only be done with the help of some positive earnings reports from the big hitting companies reporting this week, including Capital One, SanDisk, Coca Cola, Altera, Boeing, Northrup Grumman, Fifth Bancorp, Amazon, Honeywell, Schlumberger, and Ford, to name but a few.
The DOW closed on 7841 after a loss of 289 points (3.5%) while the S&P traded at 833, lower by 4.3%, and the technology-heavy NASDAQ traded at the 1608 area, a 65 point move in one day that removed 3.8% of its value.
The Dax 4486 (-4.1%), FTSE 3990 (2.5%), and Cac 40 2969 (3.9%) all lost ground in a synchronized move lower in European trade and never looked back.