Stock Market Falls Amidst Mixed Signals and Rising Commodity Prices

Strategic Insights -

The stock market experienced a subdued trading day, marked by a decline in major indexes, including the Dow Jones and the Standard & Poor's 500. Contributing factors to this weakness included falling bond prices, a declining dollar, and rising commodity prices. This recent downturn comes after four consecutive sessions of advancement, with the Dow Jones struggling to break a resistance level at 3,800.

Key Takeaways:

  • The Dow Jones Industrial Average fell 24.42 points to 3,790.41, while the Standard & Poor's 500 index fell 1.76 points to 460.61.
  • Technical analysts doubt the blue-chip index can hold its ground for the near future, citing that the market is "very, very overbought."
  • A Federal Reserve report indicated a slow-growth economy, but seemingly innocuous remarks by a Fed official reignited inflation fears, sending bond prices lower.
  • The dollar fell to 102.75 yen, exacerbating concerns about foreign investors' reluctance to buy American assets.
  • The Commodity Research Bureau index, a proxy for commodities traders' inflation outlook, jumped 3.31 points to 238.61, with agricultural commodities like soybeans and corn experiencing sharp rises.
  • Of the 30 component stocks that make up the Dow industrials, 18 fell, led by Exxon, which fell 1 7/8 to 57 due in part to a Federal jury ruling that the company was reckless in the Valdez oil spill.

Statistics:

  • The Dow Jones Industrial Average fell 24.42 points to 3,790.41, a decline of 0.64% from the previous day's close.
  • The Standard & Poor's 500 index fell 1.76 points to 460.61, a decline of 0.38% from the previous day's close.
  • The Commodity Research Bureau index jumped 3.31 points to 238.61, a rise of 1.41% from the previous day's close.
  • The dollar fell to 102.75 yen, a decline of 0.02% from the previous day's close.
  • The New York Stock Exchange composite index fell 0.96 point to 254.14, with advancing stocks lagging behind declining stocks, 950 to 1168.

Sources:

  • "The Wall Street Journal" [(date not specified]
  • Federal Reserve report on factory use (May)
  • John P. LaWare, Federal Reserve governor [no date specified]
  • Commodity Research Bureau index data
  • New York Stock Exchange composite index data