Briefing.com's Close Update

greenback

Stocks staged gains in the first few sessions of September, but market participants returned from Labor Day ready to sell. Their efforts were focused on financials and other cyclical plays.

In the four sessions leading up to Labor Day weekend the S&P 500 gained more than 5%. In the wake of such a heady move came rekindled concerns about the health of European banks. That invoked stiff selling among bank stocks. In turn, the KBW Bank Index fell 3.2%, which cut into the 8.5% gain that it had made over the four previous sessions.

Weakness among large-cap banking issues undermined the broader financial sector. As such, financials fell to a collective loss of 2.4% and closed at session lows.

Profit taking also undercut other cyclical plays, like consumer discretionary stocks and energy stocks. Both of those sectors fell 1.6%.

In contrast, defensive-oriented issues were the only ones to limit losses. Specifically, consumer staples stocks and telecom stocks both slipped just 0.3%, while both utilities and health care stocks ended 0.6% lower.

Still, such widespread weakness stoked volatility. That sent the Volatility Index (VIX) up almost 12% from the four-month low that it set late last week.

Amid the stock market's slide and the increase in volatility Treasuries attracted strong support - the benchmark 10-year Note climbed almost a full point and the 30-year Bond tacked on two full points.

Results from an auction of 3-year Notes were largely lackluster. The auction drew a bid-to-cover of 3.2, dollar demand of $105.9 billion and an indirect bidder participation rate of 42.4%. The four previous auctions held an average bid-to-cover of almost 3.3, dollar demand of about $116.3 billion, and an average indirect bidder participation rate of 44.6%.

The greenback made a big gain by climbing 0.9% against a basket of competing currencies. Most of the move was against the euro, which dropped 1.4% in its steepest single-session slide in nearly four weeks.

Favor for safety also sparked buying in the yen, which set a fractionally improved 15-year high of 83.5 yen per dollar. Japan's central bank brought little surprise with its decision to keep its benchmark lending rate at 0.1%.

News flow was light all session, though former Hewlett-Packard (HPQ 39.92, -0.43) head Mark Hurd is now co-President of Oracle (ORCL 24.27, -1.34). CNBC later reported that Hewlett-Packard has filed a lawsuit against Hurd for violating confidentiality agreements.

Advancing Sectors: (None)
Declining Sectors: Financials (-2.4%), Energy (-1.6%), Consumer Discretionary (-1.6%), Tech (-0.9%), Industrials (-0.9%), Materials (-0.8%), Health Care (-0.6%), Utilities (-0.6%), Telecom (-0.3%), Consumer Staples (-0.3%)
DJ30 -107.24 NASDAQ -24.86 NQ100 -0.7% R2K -2.2% SP400 -1.5% SP500 -12.67
NASDAQ Adv/Vol/Dec 590/1.69 bln/2060 NYSE Adv/Vol/Dec 799/829 mln/2203