Market Wrap For October 8: Nasdaq Dives As Default Likelihood Increases

Tuesday kicked off earnings season as Alcoa AA reported earnings after the close.

Markets are reacting stronger to the government shut down each day as the likelihood for the first US default continues. The Nasdaq led the way down Tuesday as technology [Apple AAPL] and internet stocks [Facebook FB] tumbled.

Major Averages

The Dow Jones Industrial Average tumbled 159.71 points, or 1.07 percent, to 14,776.53.

The S&P 500 dropped 20.67 points, or 1.23 percent, to 1,655.45.

The Nasdaq Composite dropped 75.55 points, or two percent, to close at 3,694.83.

The Russell 3000 fell 13.71 points, or 1.36 percent to finish at 994.73.

Small Business Optimism

The NFIB small business optimism figure, which is a general indicator of small business health, missed analyst estimates by 1.4 percent at 93.9. This also comes in below the previous reading of 94.

Stock Movers

McKesson Corporation MCK rallied on Tuesdays session, gaining 3.16 percent to $133.72 after news broke that the company was in talks to buy its competitor Celesio.

Outerwall OUTR was also up, gaining 6.20 percent to $63.04. TPG-Axon Management reported a 5.1% stake in Outerwall. Yesterday, Jana Partners disclosed a 13.5% stake in the company.

Shares of Exact Sciences EXAS were down throughout Tuesday's session, falling 11.28 percent to $9.99, possibly linked to this being the first week its options are tradable.

Seaspan SSW shares tumbled 9.54 percent to $21.53 after the company announced concurrent public offerings of common shares and convertible senior notes.

Clean Energy Fuels CLNE was down 12.39 percent to $11.38 after Piper Jaffray reiterated the stock with an Underweight rating and lowered the price target from $9.50 to $4.50.

Commodities

Crude oil moved modestly higher Tuesday. Near the close of equities, WTI crude futures were up 0.46 percent to $103.50. Brent futures added 0.35 percent to reach $110.06, tightening the spread. Natural gas continued rallying, adding 2.29 percent to reach $3.71.

Conversely, precious metals futures took small losses on the day. At last check, COMEX gold futures were down 0.3 percent to $1,321.10. Silver contracts fell 0.07 percent to $22.37 near the close.

Global Markets

After more than a week off, Chinese traders returned to work with higher markets. The Shanghai index gained 1.08 percent, and Hong Kong’s Hang Seng rose 0.89 percent. Japan’s Nikkei was also up 0.3 percent.

European markets were mostly flat on the day. The Euro Stoxx index, which tracks 50 euro zone blue chips fell 0.67 percent percent. London's FTSE dropped 1.11 percent, and France's CAC dropped 0.77 percent.

Currencies

The U.S. dollar added value on Tuesday’s sell off. The PowerShares ETF UUP that tracks the performance of the greenback versus a basket of foreign currencies, gained 0.07 percent to close at 21.57.

The closely watched EUR/USD pair fell 0.07 percent on to $1.3571 on modest dollar gains. Other big movers for the day include the USD/CAD pair, which rose 0.53 percent, and the USD/MEX couple that rose 0.47 percent.

Volume and Volatility

Volume was especially high Tuesday after Monday’s weakness. 168 million shares of the SPDR S&P 500 ETF SPY traded hands, compared to the ten day average of 115 million and three month average of 124 million.

Volatility continues to rise and is now almost at the 52 week high. The VIX measure of volatility rose 4.64 percent to close at 20.31. The metric is now up 31.37 percent over the past five days.