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The market resumed its drop from yesterday as few were interested in buying stocks ahead of the weekend. It was a terrible week and month for bulls. For the week, the S&P 500 was off by 2.9%, the Dow was off by 4.1% while the Nasdaq fell 3.8%. Month-to-date, the Dow was down by 10.2% and the S&P 500 was down by 8.7%. Actually during the session the Dow briefly entered into bear territory as defined by a 20% drop from its previous high and closed only 20 points above that level. The drop in the S&P 500 made it not only the worst monthly performance since September 2002 but the 12th worst month of all time, which includes months such as October 87 and September 74. We got some interesting news on the economic front this morning. On the one hand, consumer spending rose a better-than-expected 0.8% in May, making it the biggest increase since November. On the other hand, consumer confidence dropped to 56.4, the lowest level in 28 years. In a related note, the PCE core inflation rose 0.1% while economists were expecting an increase of 0.2%.
Commodities were among the biggest winners for the session. The CRB commodity index moved slightly higher and closed at a new high. Crude earlier hit almost $143 a barrel before ending the session above $140 for the first time on record. On the loser’s list, we had names such as financials and consumer cyclicals. It should be noted that Philadelphia Banking Index is more than 30% below its 200-day moving average, exceeding the extremes last seen in January and March. The US dollar was lower against most major currencies while treasuries continued to rally amid flight to quality. The VIX index finished the day lower by around 2%. The volume was on the heavy side due to Russell rebalance while the market breath was negative.
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