US Market Commentary (After Market Close): Stocks Fall as Participants Question Market's Direction

Stocks spent the entire session mired in weakness as cautionary comments about the U.S. debt rating and strength in the U.S. dollar weighed on the minds of participants. Broader sentiment remains mixed, though, as participants continue to assess the market's near-term direction.

Sellers were stirred to action amid word from The Wall Street Journal that Moody's Investors Service believes the U.S. and U.K. need to trim their respective deficits in order to help protect against a downgrade to their triple-A ratings. Meanwhile, analysts at Fitch stripped Greece of its A-rated status. It wasn't apparent whether Greece's downgrade was referenced by European Central Bank member Stark when he suggested that there may be more surprises beyond the debt debacle in Dubai, but the comment raised eyebrows nonetheless.

Despite concerns for a mounting U.S. deficit, President Obama suggested that the U.S. needs to continue to spend its way out of recession as he called for new infrastructure projects and tax breaks for small businesses that will help temper unemployment. Concerns for the financial health of the U.S. have weighed on the U.S. dollar for many months, but support for the greenback this session lifted the Dollar Index 0.7% to a fresh one-month high.

Per usual, the greenback's gain weighed on the broader stock market, but its impact was most considerable against energy and materials stocks. Broad-market pressure and lower commodity prices conspired to take both sectors to losses of 1.7%.

Commodity prices, as measured by the CRB Commodity Index, fell 0.8% -- its fourth loss in five sessions. Oil prices were a primary detractor of the CRB; crude oil futures finished at $72.74 per barrel as they fell 1.6% in their fifth straight loss.

There were a handful of corporate announcements from some relatively widely held names, but they didn't cause much of a stir among participants.

Dow component 3M (MMM 77.11, -0.80) reaffirmed that it expects adjusted earnings for fiscal 2009 to range from $4.50 to $4.55 per share, but that remains below the consensus forecast for $4.57 per share. The company expects earnings in fiscal 2010 to range from $4.85 to $5.00 per share, which brackets the $4.94 per share consensus estimate.

FedEx (FDX 89.88, +2.36) issued last evening a forecast for $1.10 per share in the second quarter. That is below the $1.58 per share that it earned in the same period of the previous year, but it is up markedly from the company's previous guidance, which called for earnings to range from $0.65 to $0.95 per share. It also exceeds the consensus call of $0.85 per share for the quarter.

McDonald's (MCD 60.61, -1.32) recorded a 0.6% dip U.S. sales during November. That undercut global comparable sales, which increased a modest 0.7% during the month.

Though stocks were mired in weakness for the entire session, Treasuries garnered moderate support as the benchmark 10-year Note climbed just seven ticks. Treasuries came under closer focus midsession as news that a $40 billion auction of 3-year Notes produced a bid-to-cover ratio of nearly 3.0, which is better than the 2009 average ratio of 2.7, but not as strong as the ratio of 3.3 that came about in the previous auction.

Weakness in the broader market handed the S&P 500 its second straight loss and its fourth decline in eight sessions. The split between advancing sessions and declining sessions comes as participants try to determine the near-term direction of trade after stocks repeatedly failed to hold new 2009 highs last week. The most notable rollover came as stocks faltered after an impressive monthly payrolls report. That move suggested that the positive economic news had already been priced into the stock market and that something more was needed to help stocks hold gains amid a simultaneous advance by the dollar.