“To me the only question is if the stock market is going to correct its current overbought condition by going sideways, or if it is going to correct back to the 1,400-1,422 support,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, wrote in an e-mail today. His firm oversees $350 billion.
Financial and commodity shares had the biggest declines among 10 groups in the S&P 500. The Morgan Stanley Cyclical Index tumbled 1.1 percent after rallying for four straight days. The Dow Jones Transportation Average slipped 1.4 percent and the S&P Supercomposite Homebuilding Index lost 1.7 percent after rallying 8.5 percent last week.
The KBW Bank Index declined 1.6 percent as 22 of its 24 companies slipped. Bank of America, which climbed 20 percent in the past two weeks, tumbled 2.6 percent to $9.31 for the biggest drop in the Dow. Morgan Stanley declined 2.6 percent to $17.77. Wells Fargo & Co. fell 1.8 percent to $35.47 after Stifel Nicolaus & Co. cut the fourth-largest U.S. bank by assets to hold from buy.
Alcoa, the largest U.S. aluminum producer, slid 2.4 percent to $9.60, as the S&P GSCI Spot Index of 24 commodities fell 2.5 percent, the most since July.
Cliffs Natural Resources slipped 7.2 percent to $42.26 for the biggest decline in the S&P 500. JPMorgan downgraded the stock to neutral from overweight.
Netflix Inc. fell 5.7 percent to $57.06. The world’s largest video-subscription service was rated underperform in new coverage at Macquarie Capital USA Inc.
Boeing Co. lost 1.7 percent to $70.08. Oppenheimer & Co. analyst Yair Reiner said the shares of the world’s largest maker of cargo aircraft may fall, citing GEnx engine issues after one cracked on a Boeing 787 Dreamliner during testing in Charleston, South Carolina, on July 28, spewing hot metal parts.