Market Wrap for Wednesday, May 29: Stocks Fall on Profit Taking After Big Rally
Share prices fell on Wednesday after a Tuesday rally sent both the Dow and S&P 500 out near all-time highs.
The sell-off appeared to be driven primarily by profit taking by investors who have enjoyed a big run-up in the market in 2013 and may be getting worried about over exuberance. The Dow closed the session down triple digits, but only barely.
The S&P and Nasdaq also experienced similar losses. The coming days will be important in determining if this is the start of a change in sentiment, but for right now, Wednesday's move lower just looks like a harmless correction.
The Dow Jones Industrial Average fell around 107 points, or 0.69 percent, to 15,303.
The S&P 500 lost almost 12 points, or 0.70 percent, to close just above 1,648.
The Nasdaq shed around 21 points, or 0.61 percent, to 3,468.
Energy prices fell on Wednesday along with the broader stock market. In late trade, NYMEX crude futures were down around 2 percent to $93.08. Brent crude had lost a little less than 2 percent and were last trading at $102.40. Natural gas lost 0.62 percent on the day to $4.15.
Precious metals were higher on the session despite losses for most other risk assets. Near the close, COMEX gold futures were up 0.93 percent to $1,392.50. Silver futures had risen 1 percent to $22.42. Copper was last trading down 0.44 percent on Wednesday.
In the grains complex, both corn and wheat climbed on the session. Corn added 2.68 percent while wheat was last up 1.30 percent. In the soft commodity complex, volatility was limited with the only mover over 1 percent being orange juice futures, which had added 1.02 percent.
After falling sharply on Tuesday, bond prices rebounded on Wednesday. Nearing the close of the equity market, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) was up a little better than 1 percent to $115.02. The rise in prices drove yields lower on the day.
The 2-Year Note yield was last down one basis point to 0.29 percent. The 5-Year yield lost two basis points to 1.00 percent and the 10-Year Note yield fell four basis points to 2.12 percent. The 30-Year Bond yield shed five basis points on the session and was last trading at 3.27 percent.
At last check, the PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was down 0.74 percent to $22.71.
The EUR/USD pair climbed 0.46 percent on the day to $1.2934. The only other significant mover on the session was the USD/JPY, which fell 0.91 percent.
Volatility and Volume
Volatility expectations were only up slightly on the session despite the downswing. Late in the day, the VIX, a widely watched barometer of market fear had added less than 3 percent to 14.87.
Volume was elevated on Wednesday as traders reacted to the market correction. Around 143 million SPDR S&P 500 ETF (NYSE: SPY) shares traded hands compared to a 3-month daily average of 124 million.
Shares of Stewart Enterprises (NASDAQ: STEI) were trading up around 33 percent late on Wednesday after Funeral Service Corp. International (NYSE: SCI) agreed to buy the company for around $1.1 billion.
Smithfield Foods (NYSE: SFD) surged almost 29 percent after China's Shuanghui agreed to purchase the company for $4.7 billion.
Shares of Aegerion Pharmaceuticals (NASDAQ: AEGR) rose almost 15 percent on Wednesday after JPMorgan raised its price target on the stock.
Hecla Mining (NYSE: HL) rose 11 percent after the company's Lucky Friday silver mine resumed production.
The Fresh Market climbed more than 8 percent after the company released its Q1 results prior to the market open.
MRC Global was trading down around 14 percent heading into the close after the company's line pipe sales missed expectations.
Sabra Healthcare REIT lost more than 7 percent as investor concern over higher interest rates dragged down the entire sector.
Associated Estates Realty (NYSE: AEC) lost around 7 percent after announcing the pricing of a secondary offering.
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