The market had plenty of reasons to rally but the bulls just couldn’t keep it together and by the close the Dow surrendered a triple digit gain.
At the open it sure looked positive for the bulls.
Testifying before Congress, Federal Reserve Chairman Ben Bernanke soothed jittery investors when he said the economy should continue to expand and that the European debt crisis would only have only a "modest" impact on the US.
Adding to the positive tone, unofficial reports out of Beijing suggested China’s exports surged 50% in May. The results renewed hopes for a global recovery.
But in the late afternoon, investors ran for the exits with energy shares leading the charge lower.
Once again, BP dragged down the sector on growing worries about the costs the energy giant will have to assume because of the Gulf spill.
BP officials have said they have enough cash to handle the crisis, but the cost of protecting BP's debt against default hit record highs, suggesting increased worry about the British oil giant's ability to handle its obligations.
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The market had every reason to rip, says Guy Adami, but it didn’t. The fact that we rolled over toward the end of the day is bearish. We’re losing the energy space, the financials as well as tech. I’d keep an eye on 1040. We've challenged that level a couple times and I don't know if it can continue to hold. Even if you’re bullish, you’ve got to be concerned.
The S&P failed at 1087, adds Steve Grasso. Technically that’s significant and it says to me we're going lower. If we can't hold 1040 I think we plunge to 1000.
Also, stocks seems to be opening on the highs and closing on the lows, muses Dennis Gartman. The action has the hallmark of a bear market. Opening higher and closing lower is not a good thing if you're a bull.
I had thought fundamentals really changed on Wednesday, muses Joe Terranova. Ben Bernanke gave the market a lot of confidence. But the BP developments trumped Bernanke and I find that telling – it says a lot about the market’s mood.
BP is selling off because investors thought they were getting a cheap stock, explains veteran Gary Kamninsky. But there’s no way to know what the value of the company is right now because there’s no way to build a model. BP is a giant unknown. Also managers bought the stock as a dividend play and they’re getting burned so they needed to get out.
Also Soc Gen raised the question of whether BP would have to cut the dividend, reminds host Melissa Lee. They think the company may come under political pressure to suspend it.
I added to my position in BP on Wednesday, reveals hedge fund manager Whitney Tilson. With the stock down 15% I thought the stock was attractive. That’s not to say I don’t realize they have a terrible safety record. Or that they botched the clean up. I realize all of that; BP will have to pay a lot of money.
But they’re such a profitable business they’re going to be able to pay it, Tilson adds. The idea that the business will somehow file for bankruptcy is the silliest thing I’ve ever heard of.
If you’re looking for a trade, I’d go long nat gas with the HGT, says Guy Adami.
GOLDMAN CUT ITS 6 MONTH OUTLOOK FOR EURO TO 115
After hours, Goldman Sachs took down estimates for the euro lowering the price target to 1.15 in 6 months.
What should you make of it?
They’re citing the political risk in Europe as well as a weak economy, says Joe Terranova. It’s significant because Goldman was one of lone holdouts.
I believe the euro is going to parity with the US dollar, muses Guy Adami.
I agree that it goes to parity, echoes Brian Kelly. And I have to say Goldman is late to the game.
Maybe the Goldman note is a signal to be a contrarian, muses Pete Najarian. Maybe think about getting long.
Find out what Dennis Gartman has to say about the downgrade. Also hear why he's concerned about the action in gold.
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CNBC.com with wires