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Stocks slump as taper weighs on investor sentiment

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Stocks slump as taper weighs on investor sentiment

Stocks in the US were off to a soft note, with the exception of Apple (NASDAQ:AAPL) which continued to move higher on the heels of Tuesday’s news that billionaire investor Carl Icahn had taken a substantial position in Apple stock.  The price touched 500 dollar a share for the first time since in 2013.  Weaker than expected PPI data was a non-event, while better than expected EU GDP created a headwind for US equities.

Prior to the opening bell, US investors needed to absorb the slightly better than expected EU GDP data which saw growth within the 27 member country union expand for the first time in 6 quarters. According to the European Union’s official statistics agency GDP increased by 0.3% q/q and was down 0.7% on an annualized basis. GDP was fastest quarterly increase since the first three months of 2011.

US equities also received a boost from Asian stocks which continued to generate positive tailwinds.  The Nikkei rallied 1.3% while the Hang Seng increased by 1.2%.

Interest rates in the US continue to create a headwind for stock prices.  Generally increases in rates are accompanied by strong data, but in this instance it is more of a function of bond traders believing that the Fed will begin tapering of their bond purchases after their meeting in September.  Tapering continues to be front and center for stock and bond traders, as they await the conclusion of the dog days of summer.  Wednesday release of PPI data did little to alter interest rates despite coming in at 2.1% on a year over year basis.

The large cap S&P 500 index declined by .5% as momentum continues to take US stocks lower.  The MACD (moving average convergence divergence) index continue to move further into negative territory, pointing to lower prices.

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