US Market Commentary(After Market Close): Participants Dump Stocks Ahead of GDP Report

The S&P 500 closed below its 50-day moving average for the first time since mid-July as sellers moved en masse ahead of tomorrow morning's advance third quarter GDP reading.

Stocks were mired in weakness for the virtually the entire session as buyers stepped to the sidelines despite another batch of generally better-than-expected earnings. Stiff selling in overseas trade certainly didn't help the case for bulls, nor did disappointing new home sales data, which showed that new home sales for September fell 3.6% month-over-month to an annualized rate of 402,000 units. That was well below the rate of 440,000 units that was widely expected.

The disappointing report caused an immediate drop in stocks, though a premarket durable goods orders report that was largely dismissed. According to that report, durable goods orders were up 1.0% in September, in-line with expectations, while orders less transportation increased a stronger-than-expected 0.9%.

Partial to selling, participants pushed stocks to their worst loss since the start of the month and left the S&P 500 to trade below its 50-day moving average. The technical line initially provided some support, but persistent pressure took the stock market through the line and left it to finish near session lows.

Declines were steep and broad based as nine of the 10 major sectors posted losses.

Financials were among the worst performers this session. The sector dropped 3.2% amid ongoing weakness in bank stocks. Including this session's 3.2% decline, the KBW Banking Index has fallen more than 9% during the past four sessions.

Visa (V 76.57, +2.67) was one of the few financial issues to post a gain this session. The company garnered support after it posted last evening better-than-expected adjusted earnings of $0.74 per share.

Materials stocks were also wrought with weakness. The sector fell nearly 3.2% as the greenback gained 0.5% against a basket of major foreign currencies, causing weakness among basic materials stocks and commodities-related stocks.

With the dollar gaining ground for the fifth straight session, the CRB Commodity Index fell 2.0% in its worst single-session loss in one month. Both metals prices and energy prices weighed heavily on the CRB. Gold prices settled pit trade 0.5% lower at $1030.50 per ounce, below their 2008 high of $1033.90 per ounce, while crude oil prices dropped 2.8% to $77.44 per barrel following disappointing gasoline inventory data this morning.

Softer oil prices and broader market weakness took the energy sector to a 2.9% loss. Better-than-expected earnings from ConocoPhillips (COP 49.49, -1.41) did nothing for the sector.

Telecom stocks made up the only sector to advance. What's more, its 1.8% gain was its best single-session advance in one month and it came in the face of considerable weakness in the broader market. Its gain this session extended the previous session's advance. In the weeks preceding that point, telecom had been considerably underperforming the broader market.

Participation was strong this session. Specifically, nearly 1.7 billion shares exchanged hands on the NYSE. That's the highest level in more than one month and exceeds both the 50-day and 200-day moving average for trading volume.

Another round of Treasury auctions was met with solid turnout. An auction of 5-year Notes produced an above-average bid-to-cover ratio 2.6. Though Treasuries pulled back a bit following the announcement, weakness among equities helped Treasuries hold onto gains. In turn, the yield on the benchmark 10-year Note has fallen to roughly 3.4% from 3.5% in just two days.

Treasuries have performed well this week and stocks are now down more than 3% week-to-date, but both fixed income traders and equity market participants are turning their attention to the advance third quarter GDP morning, which is a headline event for tomorrow morning.