Market Recap for 2nd Feb 2016 – Should we be worried?

By Markus Heitkoetter

Stocks opened lower today and continued to drop throughout the session.

And it wasn’t pretty.

The DOW suffered a triple-digit loss. The S&P had its biggest drop in more than 2 weeks. And the NASDAQ was down over 2.0%.

There were a number of factors that contributed to today’s sell-off:

Crude Oil (CL) – CL was hammered and closed back below $30 a barrel.

Apple (AAPL) – AAPL showed weakness and finished 2.0% lower.

Downgrades – The S&P downgraded the credit rating of multiple companies with ties to energy. Chevron (CVX) had its credit rating cut by the S&P for the first time in three decades. Apache (APA), Devon Energy (DVN), and Marathon Oil (MRO) were also downgraded. Meanwhile, Exxon Mobil (XOM) was placed on a credit watch.

To make matters worse, traders hoping for a break from the Fed this year were let down by a voting Fed member. In a speech in Kansas City today, FOMC Member George said that “economic growth, steady job gains and modestly higher core rates of inflation will warrant further (rate) increases.”

Here’s where the major indices ended the day:

The S&P finished with a 1.9% loss. Down 36 points, the S&P ended at 1,903.

The DOW ended 1.8% lower. Losing 296 points, the DOW closed at 16,154.

The NASDAQ decreased by 2.2%. Dropping 103 points, the NASDAQ finished at 4,517.

Yesterday stocks shrugged off Crude Oil’s decline. But today stocks joined Crude Oil (CL) with another big sell-off. Crude Oil lost 5.4% and ended the session at $29.90 a barrel.

The only highlight today was Alphabet (GOOGL) finishing higher.

GOOGL shares rose in reaction to yesterday’s better than expected earnings. Today’s 1.3% gain and close of $780.91 made GOOGL the biggest company in the world.

Tomorrow’s economic calendar will be the most active so far this week. We’ll have ADP Non-Farm Employment Change at 8:15am ET, ISM Non-Manufacturing PMI at 10:00am ET, and Crude Oil Inventories at 10:30am ET.

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