EmailThe U.S. equity market struggled under the weight of a weak technology sector on Monday and closed down across the board. The Nasdaq paced the retreat with a 0.8% decline. Volume was expectedly weak on the Columbus Day holiday with just 464 mln shares traded at the NYSE.
At the moment, the market is on course for a slightly higher open.
The startling performance of Apple (AAPL), which dropped 2% yesterday and is down 9% since September 19, has been a restraining influence on the broader market.
When the best of the best struggles to move up after a big run, it is often regarded by participants as a sign to take profits from other stocks that had followed in its leadership wake. With Apple on the cusp of a correction then, it will be watched closely as a directional cue for the market.
Other limiting factors this morning include a report that the IMF cut its 2012 global growth forecast to 3.3% from 3.5% and scenes of violent protests in Athens where disenchanted citizens are making their frustrations known to German Chancellor Merkel, who is visiting today.
In a certain sense, it is the same old same old on the macro front. That is perhaps why the futures market hasn't been more responsive to these seemingly negative developments. They simply aren't surprising.
European bourses are a mixed bag, yet none of the major markets are up or down more than 1.0%.
The Chinese stock market was a standout on Tuesday, gaining 2.0% on word the People's Bank of China pumped approximately $40 bln more into money markets and that regulatory authorities are exploring ways to improve market access for qualified foreign institutional investors. In other words, the market rallied on artificial support factors rather than fundamental factors.
On a related note, the IMF cuts its 2012 growth forecast for China to 7.8% from 8.0%.
Notwithstanding the downward revisions from the IMF, commodities are holding up this morning. Crude futures are up 1.2% to $90.43 per barrel and copper futures are holding steady.
There is a $32 bln 3-year Note auction today. Results will be announced at 1:00 p.m. ET. There isn't any economic data of note today, although the third quarter reporting period kicks off with Alcoa's (AA) report after the close.
In the meantime, the stock market will be left to trade on its own, which for many means it will go where Apple's stock takes it.
--Patrick J. O'Hare, Briefing.com
