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Market: Just A Flat Out Ugly Day

It was a flat-out ugly day, with 3-1 declining to advancing stocks, 160 new lows at the NYSE (highest level since the March lows):

1) Despite considerable jawboning, the dollar was weak, commodities were strong, and that combination has not proven to be helpful to stocks. With oil near new highs, the Dow Transports dropped nearly 5 percent for the second time in four days (ouch!)

2) Many homebuilders, which had hit bottom in January, were again at new lows;

3) Notable weakness again in financials, where Lehman continued to drop (down another 13 percent), thanks partly to Merrill analyst Guy Moszkowski downgrading the stock midday, one week after he upgraded it. Traders weren't sure if they should laugh or cry. It's an indication of how confused traders and analysts are.

Elsewhere, anything with mortgage exposure, including Washington Mutual, as well as southern and Midwestern bank stocks like KeyCorp and SunTrust, were again at new lows.

4) Finally, big name healthcare stocks in pharma and HMOs continued to drop. This is part of the ongoing realization that stocks like Pfizer , Merck or Bristol Meyers , formerly considered safe, cuddly, defensive plays where you could hide out, are not so safe or cuddly.

Elsewhere:

1) How tough is it on the sell-side trading desks? I spoke to several traders I have known for many years today. The mood is not good. Remember: sell side traders are in the business of getting accounts to buy and sell stocks, and right now they are decidedly unsuccessful in getting them to do much of either. "It's really hard to get accounts to buy stocks, and they don't want to sell their longs, because even though they're down, they're not down so much they can't stand it," one frustrated trader told me.

Bottom line: we are in a trading range, and we need either another giant flush-out (didn't we have two of them--one in January, and another in March? Yes.) or we need to get better news on inflation or the economy.

Trading veteran Ned Davis is also a bit frustrated; this morning, after reviewing several conflicting indicators, and noting that they are consistent with an S&P 500 trading range between 1262-1275 on the downside (roughly the March low) and 1390-1450 on the upside (near the May high), Davis threw up his hands and declared himself neutral on the market.

2) The economics of the cab business in New York.

I took a cab ride last night from the Financial District to Greenwich Village last night; I did my usual "How's business?" line with the driver, and unlike most he was willing to discuss how tough it has become for cab drivers.

Here's the economics: he pays for his own gas. He is quite proud of his Ford Escape hybrid, which he says enables him to get 33 miles to the gallon. Even then, it's an ugly situation for him. He works 12 hours a day, 5 days a week, for a total of 60 hours a week. He is currently netting about $700 a week ($11.66 an hour!). Two years ago, he was working the same amount of hours and making $900 a week ($15 an hour), so his net pay has dropped over 20 percent in the past two years. He made it clear he had not seen a dramatic drop in business; the loss is almost entirely due to higher gas prices.


Questions? Comments? tradertalk@cnbc.com

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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