- Investors debate whether a correction may be looming
- VIX slips 1.7% to 10.96
- No obvious trigger for a correction, analysts say
Dow Jones Industrials: -0.09%
Nasdaq Composite: -0.10%
S&P 500: -0.13%
The main US equity gauges were drifting lower on Tuesday afternoon in a session marked by scarce newsflow, whether on the macroeconomic or corporate fronts.
Not surprising then perhaps that investors could be found turning their attention to some pundits´ warnings that a 'correction' lower might be looming. That was certainly not non-sensical as one widely followed gauge, the Chicago Board of Trade´s VIX index for implied volatility for options contracts on the S&P 500, hit seven-year lows just last Friday.
In fact, historically such periods of calm do indeed precede 'corrections', defined a drop of up to less than 20%, in equities. The hard part of course is to try and anticipate the exact timing of any such event. Even for experienced traders trying to predict changes in volatility can be a very costly proposition.
Indeed, over recent days quite a few analysts explained as much to Sharecast but were at a loss when trying to forecast any sudden change towards tighter monetary policy in any of largest economies or to point out possible triggers for a correction.
However, the European Central Bank for example seemed bent on going in exactly the opposite direction.
In that regard, Capital Economics wrote to clients on Tuesday explaining that while they see many possible risk factors to take into account "Admittedly, there are no obvious triggers on the horizon for a major correction."
Perhaps as if to underline their words, in parallel Bloomberg reported that Uruguay - which has the second lowest investment grade rating from Moody´s - was planning to sell 36-year bonds.
To take note of, the Financial Times cited Stephen Jen, one of the co-founders of SLJ Macro Partners, as laying part of the blame for such low volatility at the feet of tougher bank regulations, which have increased the cost of trading.
Light day on the economic front
Job openings jumped by 4,455 in April after 4,166 openings in March. Analysts had predicted a 4,050 gain.
The National Federation of Independent Business' small-business optimism index increased to 96.6 last month from 95.2 in April, beating forecasts for a reading of 96.2.
eBay declined after saying David Marcus will step down as the head of its PayPal unit to join Facebook. Facebook advanced on the news.
RadioShack Corp. slumped after reporting a wider quarterly loss.
Allergan Inc. edged higher as the Botox maker's board unanimously rejected a takeover offer.
Molson Coors Brewing Co. gained as the North American beer company reported a jump in first quarter earnings.
Yields slip lower
The 10-year Treasury yield rose three basis points to 2.63%.
West Texas Intermediate crude futures fell $0.038to $104.370 per barrel, according to the ICE.
S&P 500 - Risers
International Game Technology (IGT) $14.30 +8.42%
Molson Coors Brewing Co. Class B (TAP) $71.08 +5.92%
Analog Devices Inc. (ADI) $55.76 +5.83%
Facebook Inc. (FB) $65.51 +4.18%
Citrix Systems Inc. (CTXS) $64.14 +3.35%
Monster Beverage Corp (MNST) $69.87 +2.33%
Salesforce.Com Inc. (CRM) $52.87 +2.24%
Electronic Arts Inc. (EA) $35.62 +2.21%
GameStop Corp. (GME) $37.28 +2.08%
Apple Inc. (AAPL) $93.98 +1.90%
S&P 500 - Fallers
Cognizant Technology Solutions Corp. (CTSH) $47.80 -4.07%
Tyson Foods Inc. (TSN) $35.99 -4.04%
C.R. Bard Inc. (BCR) $142.26 -3.91%
Urban Outfitters Inc. (URBN) $33.51 -3.37%
Gilead Sciences Inc. (GILD) $79.63 -3.35%
Range Resources Corp. (RRC) $89.22 -3.27%
Cabot Oil & Gas Corp. (COG) $34.82 -2.82%
EQT Corp. (EQT) $102.22 -2.40%
eBay Inc. (EBAY) $48.53 -2.35%
Coach Inc. (COH) $39.88 -2.31%
Dow Jones I.A - Risers
Visa Inc. (V) $214.21 +0.77%
Cisco Systems Inc. (CSCO) $24.99 +0.64%
Johnson & Johnson (JNJ) $103.83 +0.59%
Caterpillar Inc. (CAT) $109.36 +0.57%
Chevron Corp. (CVX) $125.03 +0.53%
Travelers Company Inc. (TRV) $95.13 +0.50%
Pfizer Inc. (PFE) $29.47 +0.39%
JP Morgan Chase & Co. (JPM) $57.64 +0.39%
Intel Corp. (INTC) $28.28 +0.39%
Merck & Co. Inc. (MRK) $58.15 +0.37%
Dow Jones I.A - Fallers
International Business Machines Corp. (IBM) $184.17 -1.10%
United Technologies Corp. (UTX) $119.09 -0.83%
Boeing Co. (BA) $136.89 -0.78%
Walt Disney Co. (DIS) $84.90 -0.68%
McDonald's Corp. (MCD) $100.90 -0.47%
Exxon Mobil Corp. (XOM) $101.08 -0.43%
Wal-Mart Stores Inc. (WMT) $76.68 -0.43%
Microsoft Corp. (MSFT) $41.10 -0.41%
General Electric Co. (GE) $27.33 -0.39%
Verizon Communications Inc. (VZ) $49.42 -0.30%