Did Bad News Pile Up on the Stock Market?

Monday’s stock market slump started with disappointing reports from China, followed by downbeat domestic reports and finally, bombs in Boston.

Monday was destined to bring a stock market slump after disappointing economic data from China was followed by a worse-than-expected Empire State Manufacturing Survey and a downbeat homebuilder confidence index. 

The last half-hour of the session brought a reaction to the tragic bombings in Boston. The Dow Jones Industrial Average (NYSEARCA:DIA) sank 265 points to 14,599 for a loss of 1.79 percent. The S&P 500 (NYSEARCA:SPY) took a 2.30-percent nosedive to close at 1,552.

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The Nasdaq 100 (NASDAQ:QQQ) fell 2.07 percent to 2,797. The Russell 2000 (NYSEARCA:IWM) collapsed by 3.60 percent to 908.

In other major markets, U.S. Oil (NYSEARCA:USO) intensified its ongoing descent, sinking 3.17 percent to close at $31.50.

On London’s ICE Futures Europe Exchange (NYSEARCA:BNO), June futures for Brent crude oil  declined by $3.07 (2.98 percent) to $99.97/bbl. June gold futures  (NYSEARCA:GLD) declined by $144.50, or 9.62 percent, to $1,356.90 per ounce…

Transports went off the rails on Monday, with the Dow Jones Transportation Index (NYSEARCA:IYT) collapsing 3.94 percent.

The major European stock indices made more moderate declines. The Euro STOXX 50 Index finished Monday’s trading session with a 0.33 percent drop to 2,624 — remaining below its 50-day moving average of 2,651. Japan’s Nikkei 225 Stock Average (NYSEARCA:EWJ) sank 1.55 percent to 13,275 as the yen gained unwanted strength.

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In China, the Shanghai Composite Index (NYSEARCA:FXI) sank 1.12 percent to 2,181 and Hong Kong’s Hang Seng Index (NYSEARCA:EWH) dropped 1.43 percent to 21,772 after the National Bureau of Statistics reported that first quarter 2013 GDP expanded by only 7.7 percent on an annual basis from 7.9 percent in the fourth quarter.

Technical indicators reveal that the S&P 500 made a significant decline toward its 50-day moving average, with the Relative Strength Index falling to 47.93. Its MACD has dropped back below the signal line, which could suggest a continued decline…

For the day, all sectors finished deeply in negative territory.  The energy and materials sectors were particularly hard-hit as a result of the economic slowdown in China.

Consumer Discretionary (NYSEARCA:XLY):  -2.63 percent

Technology (NYSEARCA:XLK):  -1.65 percent

Industrials (NYSEARCA:XLI):  -3.04 percent

Materials (NYSEARCA:XLB):  -3.69 percent

Energy (NYSEARCA:XLE):  -4.14 percent

Financials (NYSEARCA:XLF):  -2.17 percent

Utilities (NYSEARCA:XLU):  -1.44 percent

Health Care (NYSEARCA:XLV):  -1.77 percent

Consumer Staples (NYSEARCA:XLP):  -1.60 percent

Bottom line: Monday’s stock market slump resulted from bad news on three fronts: Downbeat economic data from China, domestic disappointment resulting from the Empire State Manufacturing Survey and homebuilder confidence index, as well as the deadly bombings in Boston.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.

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