Losses continue to pile up with economic news creating concerns. The Dow (^DJI) fell 119.48, or1.21 percent, to a level of 9,762.69. The S&P 500 (^SPX) lost 20.78 points, or 1.95 percent, to 1,042.63. The Nasdaq (^IXIC) gave up 56.48 points, or 2.67 percent, to 2,059.61. Volume was heavy on the session with the NYSE trading 1.67 billion shares and the Naz turning over 2.80 billion shares. Market breadth was negative on the session by a 3-to-28 and 4-to-23 margin on the Big Board and Naz respectively.

The past four trading sessions have seen some major declines with the Dow down six of the past eight sessions. Stocks rallied sharply at the beginning of the third quarter earnings season, but recently, even strong earnings have not resulted in gains for the major market indices. Today, negative economic news left the bears firmly in control with the major market indices now testing support at their 50-day moving averages. As stocks have fallen this past week, fear has risen sharply with the CBOE Market Volatility Index (^VIX) up 35 percent to a price just shy of 28.

In earnings news, ConocoPhillips (COP) reported a decline in earnings and revenues from the year ago period, but results were better than expected. Nonetheless, after rising off its lows near $35 in March, COP shares fell 3.72 percent Wednesday to close at $49.49. The Oil Service HOLDRs (OIH) decline 4.5 percent to 118.25 as crude gave up $2.09 a barrel to $77.07. A smaller than expected rise in weekly inventory levels pushed prices lower, as did concerns about the economic recovery.

Durable goods orders in September rose 1.0 percent, but this was below estimates for a gain of 1.5 percent. New durable orders rose 0.9 percent when transportation orders are excluded. In August, orders fell 2.6 percent thanks to a sharp decline in auto orders following the end of the "cash for clunkers" program.

The most disappointing news Wednesday came from the new home sales report. New home sales in September fell to 402,000 annualized units from 429,000 in August. Estimates were for new home sales to rise to 440,000 during the month. The only positive in the report was the 2.5 percent gain in the median price of a new home to $204,800. However, this news might convince Congress to extend the first time buyer credit past the Nov. 30 deadline.

Thursday will be another busy day for earnings and economic news. Third quarter GDP is set for release with economists looking for growth of 3.0, although Goldman Sachs lowered their estimate to 2.7 percent today. Traders will also be interested in the jobless claims data for the past week, hoping to see further declines.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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