[Chart courtesy of MarketWatch.com]
After spending most of the day in positive territory, U.S. equities lost steam in the final hour of trading to end mostly lower, halting two days of gains, after U.S. Secretary of State John Kerry called Syria’s use of chemical weapons “undeniable.”
Once again, a larger-than-expected decline in July’s durable goods orders report did little to sooth anxiety that asset tapering by the Federal Reserve may begin soon. The major averages held modest gains into the final hour of the session when comments from Secretary of State John Kerry regarding the situation in Syria contributed to broad-based selling.
Kerry told reporters that Syrian President Bashar al-Assad’s regime was responsible for last week’s attack that the opposition blames for more than 1,300 deaths. The S&P 500 spiked lower following the statements after earlier extending its first weekly gain since Aug. 2. The comments injected a bit of uncertainty and the CBOE Volatility Index jumped to a session high as downside protection received an afternoon surge in interest.
Nine of ten sectors ended in the red with countercyclical groups leading to the downside. Consumer staples, telecom services, and utilities lost between 0.8% and 1.3% to continue their recent underperformance. Healthcare, however, managed to outperform its defensively-oriented peers and finish in the lead with a gain of 0.1%. Meanwhile, all cyclical sectors ended in the red.
Today’s economic data was limited to the July durable orders report. Durable goods orders declined 7.3% in July; the second biggest drop since the recession, although that wasn’t totally unexpected.
Ex-transportation, orders slipped just 0.6%. Nondefense capital goods excluding aircraft, however, dipped 3.3% after four months of progress. Computers and electronic products posted a notable decrease of 3.6%, hurt by a 19.9% plunge in computers and related products, the biggest drop since January 2009, to a record low.
Our Trend Tracking Indexes (TTIs) slipped with the Domestic TTI ending the day at +1.83% while the International TTI closed at +4.93%.