Is Mr. Market Suffering from a Super Bowl Hangover?
On Monday, stock across the board appear to be suffering from a weekend hangover. The Dow Jones Industrial Average fell more than 100 points, while the S&P 500 declined 1 percent and dropped back below 1,500. A pullback is certainly overdue considering the recent rally, but European political risk is aiding the process.
In Spain, Prime Minister Mariano Rajoy is being accused of accepting and distributing illegal payments to party members. Rajoy is considered to be a front-runner in the upcoming elections, but now there is an increased amount of uncertainty. Meanwhile, former Italian Prime Minister Silvio Berlusconi is regaining popularity, which threatens reforms previously adopted. The euro declined to as low as $1.3524 and European stocks had their biggest setback in more than three months. The U.S. dollar index, which is heavily against the euro, climbed higher.
Nearly every Dow component traded in the red, with Wal-Mart (NYSE:WMT), Bank of America (NYSE:BAC) and Alcoa (NYSE:AA) leading the way. Every sector in the S&P 500 also traded lower. While the Super Bowl does not impact the long-term fundamentals of the stock market, the outcome of the big game and the current pullback echoes history…