Lots of cross currents today, and while the attack in London is rightly taking the lion's share of the headlines, other, ongoing issues are having a greater impact on the markets:
- The continuing decline in bond yields, with the 10-year yield dropping below 2.4 percent in last morning. Stocks only began to rebound when yields began moving off the lows in the late morning. Banks have been on a roller coaster all day, with many trading in a 4 percent range from high to low.
- The continuing decline in oil, which hit the lowest levels since November this morning. Many oil stocks, particularly in exploration & production and oil services, are already in correction, down 10 percent or more from their recent highs in December.
- The uncertain fate of the Obamacare repeal bill in the House of Representatives, made even more uncertain when a spokesperson for the House Freedom Caucus said midday the White House does not have the votes necessary to pass the bill.
- The uncertain fate of the timing and details of the president's tax reform bill. The SPDR S&P Retail ETF, a basket of large retail names, is already in correction, more than 10 percent off its recent highs, partly on the ongoing concern about the loss of sales in stores but also out of concern over the impact of a Border Adjustment Tax.
Put it all together, and while the is still only 2 percent off its recent historic highs, other sectors are already in correction territory:
(from recent highs)
S&P 500: down 2%
Exploration & Production: down 17.7%
Metals/Mining: down 14%
Regional Banks: down 12.6%
Retail: down 10.5%
These ETFs, of course, reflect declines in large groups of stocks, but there is considerable damage being done to individual names in banks, energy, and retail.
So why isn't the market down more? Because technology and health care — two of the three biggest sectors — have held up well.