Tuesday was the fifth consecutive day that the S&P 500 finished in negative territory. Worse yet, the S&P closed below its crucial support level of 1,375. All three of the major stock indices finished Tuesday’s trading session with declines in excess of 1.5 percent. Miami-based corporations saw their stocks take particularly hard hits on Tuesday, although Carnival Cruise Lines (CCL) fared no worse than the S&P 500 index.
Tuesday started with grim news from Europe, where the sovereign debt crisis continues to gain momentum. The yield on Spain’s 10-year bonds advanced by 0.17% from Friday’s market close to hit 5.93%. The yield on Italian 10-year bonds rose 0.13% to 5.59%. (European markets were closed on Monday.) The major European stock indices finished the day with massive losses. The STOXX 50 swooned by 2.97% and the German DAX Index closed with a loss of 2.49%.
When the American stock markets opened, the European gloom continued. Apprehension about the new earnings report season added to bearish sentiment, despite the fact that Supervalu (SVU) reported earnings which fell less than expected, sending its stock skyward beyond 10% during the first half-hour of trading. Shares in Alcoa (AA) were pummeled with a decline of 2.92% in anticipation of disappointing earnings, which were scheduled for release after the market close. Nevertheless, Alcoa reported a record revenue total of $6.0 billion (which exceeded analyst estimates of $5.77 billion). Alcoa’s earnings were 10 cents per share, compared with expectations for a 4-cent loss per share.
The Dow Jones Industrial Average took a steady, downward trajectory on Tuesday, which concluded with an ominous “head and shoulders” pattern. The Dow closed at 12,715 for a loss of 213 points (1.65 percent). The S&P 500 declined by 1.71 percent to finish at 1,358. The NASDAQ Composite lost 1.83 percent to end the day at 2,991.
Miami-based corporations had a horrible day on Tuesday. Carnival Cruise Lines (CCL) escaped with the least damage, with a loss of 1.71% to close at 30.49. Ryder System (R) declined by 3.43% to finish at 50.13. Royal Caribbean (RCL) sank by 4.81% to close at 26.72. Lennar (LEN) had the worst luck, with a dreadful loss of 7.27% to end the day at 24.50.
The following companies will be playing “beat the number” on Wednesday, with the release of their quarterly earnings reports: Adtran (ADTN), Apogee Enterprises (APOG), Computer Sciences Corporation (CSC) and Titan Machinery (TITN). Good luck!