Late Rally Can’t Overcome Slow Start

Amid about as much bad news and uncertainty from Japan as you’d want to deal with, the performance of U.S. equities on Monday was relatively sanguine. While stocks did touch their lowest point in more than five weeks, they also rallied enough to pull themselves essentially even with their level on Thursday, when the market staged a significant selloff. By Monday’s close, the Dow Jones Industrial Average had lost 51 points to 11,993, the Nasdaq fell 15 points to 2701 and the S&P 500 was off 8 points to 1296. The weekend’s events in Japan added even more complexity to Monday’s trade, as one would expect. Combining with the selloff itself in Japan’s Nikkei Index, which fell more than 6% on Monday — its biggest decline in more than two years — was the push-and-pull of oil prices: in short, how to compute both the still-uncertain Middle East (higher-price bias) and still-uncertain Japan (lower-price bias, due to lowered demand? For Monday, you don’t, as the oil prices were essentially a push, finishing close to flat at just more than $101 a barrel. But this was down day for stocks and, those that suffered were those that have, for now, taken on more risk as investors — and consumers — are forced to address the near-term and long-term role of the nuclear industry in the U.S. Shares of General Electric (NYSE: GE ), which was a supplier to the Japanese nuclear plant now on the minds of every Japanese citizen, finished 2.2% lower on Monday. The Dow Jones Utility Average slumped 1.4%. But it was also the day to put money to work in other energy suppliers — namely, solar wind and even coal. The Guggenheim Solar (NYSE: TAN ) exchange-traded fund climbed 5.4%, while the First Trust Global Wind Energy (NYSE: FAN ) ETF rose 3%. Coal miner Natural Resource Partners (NYSE: NRP ) added nearly 6% in Monday trading. As it played out, not much in Monday’s market session suggested anything other than uncertainty is the backdrop for this week. Bond traders bid their market higher, pushing the 10-year note’s yield down to 3.36% — its lowest close in nearly six weeks. And the Volatility Index continued to add to its uptrend of the past month.
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