Stocks to Watch

Dow -93.28 at 12512.04, Nasdaq -19.99 at 2803.32, S&P -10.33 at 1333.27

[] Stocks took their direction from the dollar today. Given their inverse relationship of late, a bounce by the greenback meant a loss for the major equity averages.

The stock market slid to a loss of about 1% within 90 minutes of the open. Selling pressure was stoked by a sudden rally by the dollar, which climbed as much as 0.9%. Most of the greenback’s gain came against the euro, which came under pressure amid rekindled concerns about fiscal conditions in both Greece and Spain, as well as worries about the European Central Bank’s debt burden. Other reports called into question the growth prospects of Germany, which is the eurozone’s largest economy.

Strength in the dollar also put pressure on commodities, which collectively tumbled to a 1.0% loss, as measured by the CRB Commodity Index.

Both stocks and commodities were able to rebound when the dollar began to grapple with some midsession selling pressure. About half of the dollar’s gain was surrendered before it recovered to finish the trading day with a 0.8% gain.

Although the CRB Commodity Index was able to lock in a 0.7% gain for the day, the major equity averages failed to sustain their rebound. In turn, stocks rolled over and drifted lower into the close.

Weakness was relatively widespread, but defensive-oriented plays like utilities stocks (unch.) and telecom (-0.1%) were able to limit losses. Financials suffered the worst losses; as a group, they fell to a 1.5% loss.

Retailers were also weak. Downside guidance by apparel and accessories retailers Gap (GPS 19.22, -4.07) and Aeropsotale (ARO 18.30, -3.04) prompted a precipitous drop in their shares. Ann Taylor (ANN 29.09, -1.11) shares were imbued by weakness in the space, even though the company posted an upside earnings surprise and raised its sales forecast above what Wall Street had projected.

Barnes & Noble (BKS 18.33, +4.22) benefited from strong buying interest, however. The stock’s surge came in response to news that Liberty Media (LBTYA 44.82, -0.23) offered to buy the company for $17 per share, which makes for a premium of about 20% of the prior session closing price of BKS.

Roughly one billion shares traded hands on the NYSE this session. On the surface it would appear that participation increased, but the increased share volume is actually due to the expiration of monthly options.

Advancing Sectors: (None)
Unchanged: Utilities
Declining Sectors: Telecom (-0.1%), Consumer Staples (-0.3%), Energy (-0.3%), Tech (-0.7%), Health Care (-0.8%), Industrials (-1.0%), Consumer Discretionary (-1.0%), Materials (-1.0%), Financials (-1.5%)

..Nasdaq 100 -0.8%. ..S&P Midcap 400 -0.8%. ..Russell 2000 -0.7%.

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