S&P 500: -13.10 (-1.18%)
Market participants scrambled for safety, pushing the dollar to the highest level in three months. On cue, stocks and commodities traded lower.
Several factors sparked fear in markets. Greece’s second credit rating downgrade this month certainly kept government debt concerns in focus. Also, initial jobless claims unexpectedly increased, reminding everyone that the road to recovery will be bumpy. The lack of jobs was one reason the Fed plans to keep interest rates low for an extended period.
A disappointing profit forecast global shipping company FedEx (FDX) also made market participants question the strength of the economic recovery. Many use FedEx’s earnings and projections as an indicator of the nation’s economic strength since the firm transports a wide range of business and consumer goods such as auto parts, real estate documents, and toys.
It was clear from FedEx’s earnings call that the company still lacks clarity on the end demand picture. The firm says the economy is approaching a turning point, but a full recovery appears a way off. In the long run, the firm sees strong demand in Asia and Latin America leading the way to global economic recovery.
Trading volume on the NYSE hit its highest level in nearly three months. One could argue that such volume is signs of conviction behind the selling effort, but it’s important to note that tomorrow is a quadruple witching day.
Quadruple witching is a day when contracts for stock index futures, stock index options, stock options and single stock futures all expire. This occurs on the third Friday in March, June, September, and December. The name may sound scary, but it simply means there is some extra volatility as large funds and traders cover any remaining open positions before they expire and settle on Saturday.
Quick Hits
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Peter J. Lazaroff, Investment Analyst
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