A strong start again reverted to a bearish
A strong start again reverted to a bearish sell-off – the bulls have been keen this week, but their staying power has been lacking. Interestingly, the bullish start came on the heels of S&P increasing their estimates for the loan losses in Spain’s banking sector and a credit rating downgrade of BNP Paribas.
In news closer to home, US investors did not like the newest existing home sales data. Specifically, in May, existing home sales lost 2.2% month-over-month, coming in at annualized 5.66 million units, below consensus estimates of 6.12 million yearly units. This was seen as yet another indication of a slow US economic recovery and led to losses in the homebuilder and home improvement sectors.
Over the course of the final hour of trading in this lackluster session, weakness became more widespread with 95% of the S&P 500’s constituents closing red. It was another anemic volume day with the NYSE barely recording a billion shares (well below the NYSE’s 50-day average of 1.4 billion). Volume is currently low (and still shrinking) due to summer vacations but likely also because of the World Cup soccer event in South Africa.
Tomorrow will bring some crucial economic data releases, including the latest new home sales data and the verdict of the Federal Open Market Committee on interest rates, as well as its policy statement.
