Stocks were crushed today as the market erased its post-Bank of England gains yesterday in one fell swoop. The Dow, S&P, and Nasdaq Composite all cratered, almost sinking the market below its June lows in the process.
Apple (NASDAQ: AAPL) led the market lower following a bone-crunching downgrade from Bank of America. Carmax (NYSE: KMX) perhaps had the worst day of all, however, after the company reported disastrous earnings. KMX shares fell 24.60%. Investors were also feeling a little hungover from yesterday’s eruption higher in response to the Bank of England bailout that rescued 90% of the UK’s pensions.
Stocks traded lower through noon until Cleveland Fed President Loretta Mester delivered a hawkish message on inflation.
“Inflation is still at a 40-year high,” Mester said in an interview on CNBC today.
“So right now the conversation has to be we have to do, what we must do to get back to price stability because we can’t have a healthy economy, we can’t have good labor markets over time, unless we get back to price stability.”
Mester added that she’s probably “a little bit above the median path” among Fed officials when it comes to raising interest rates.
“We’re still not even in restrictive territory on the funds rate, so you’re right, we’ve moved the funds rate up 300 basis points this year, but look how high inflation is,” Mester said.
The market continued falling through the afternoon, racing to its session lows before reversing slightly in the last hour of trading.
Overall, though, it was another bad day for bulls. And it might get even worse from here.
There were few clear catalysts for today’s selloff. Mester’s commentary, while hawkish, wasn’t surprising in the least. Yields fell. The dollar slumped.
Either of those two events would have normally sparked a stock market rally given how oversold the market looks.
Instead, bulls were subject to additional losses.
Coupang (NYSE: CPNG) fell too, approaching key support at $16.00 (yellow line) along the way. The stock has done relatively well compared to the general market over the last few weeks but may finally be joining in on the selloff.
The stochastic indicator suggests CPNG has plenty of room to fall, too.
For those reasons, it might make sense to take CPNG short with a trade trigger of $15.69, below support, as the general market looks to head even lower still.
