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The Market's Give Up Yesterday's Gains

Bob Pisani is on assignment today, this post was written by CNBC producer Robert Hum.

Stocks have given up all of yesterday’s strong gains now. The markets drifted lower into the early afternoon as the dollar flirted with its own session highs. Then, as the S&P 500 fell below its Wednesday close of 1,042 (which was a 3-week low), the markets took another move lower. A notable increase in volume of the S&P 500 SPDRs was also seen by traders as the S&P fell below this support level.

The correlation between the stock markets and the dollar undoubtedly continues to be strong. Equities have fallen five of the last six days, while the U.S. Dollar Index has risen five of the last 6 days. The exception, of course, was yesterday, when stocks had their best day in three months as the dollar snapped its streak of gains.

Taking a hit today as a result of the stronger dollar are commodities. Crude oil, heating oil, unleaded gasoline, and copper all having their worst day in a month. Commodity stocks are following suit, as many of the oil, steel and metal stocks are down mid-single digits, while a number of the gold stocks are falling 5 percent to 7 percent.

Also notably weak today are many of the big industrial/cyclical stocks (Honeywell,Deere, Caterpillar, FedEx), which are falling 3 percent-5 percent.

Symbol
Price
 
Change
%Change
DE
---
FDX
---
HON
---

On the other hand, traders are favoring defensive stocks a bit more, as companies like Altria,Merck, Coca-Cola, Kimberly Clark and ConAgra are performing noticeably better, falling only fractionally to down 1 percent. A handful of consumer stocks (Kellogg, Clorox, Colgate ) are even still holding on to gains today.

Symbol
Price
 
Change
%Change
BUR
---
QRE
---
CLX
---
K
---
KMB
---
KO
---
MO
---
MRK
---

Still, the lack of follow-through from yesterday’s rally and the fact that the markets have instead given up all of their gains from yesterday is discouraging to the bulls, and a victory for the bears.

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