Here's What Traders Were Talking About During Wednesday's Market Sell Off

London metals exchange tradersREUTERS/Luke MacGregorTraders were working the phones and instant messages on Wednesday.

It was a rocky day on Wall Street on Wednesday.

The Dow fell 268 points, the S&P 500 fell 33 points, and the Nasdaq dropped 82 points.

Oil prices also took a hit, with Brent crude at one point breaking below $US65 and WTI breaking below $US61.

Via Dave Lutz of JonesTrading, here’s a quick overview of what trader’s were talking about on Wednesday:

  • Oil off 5%+ on OPEC/Saudi headlines, and heavy inventory builds. Commodity losses were mitigated some after floor trading closed, but those oil levered companies closed lower.
  • Rails and regional banks were lower on oil weakness. Texas/ND regional banks were strong for most of the session, but collapsed in the afternoon.
  • High yield bonds came under stress as the ‘HYG’ ETF broke lower due to a 15% weight on energy companies.
  • The US dollar was weakening as investors piled into Treasury bonds. The euro gathered upward momentum as traders tried to cover their shorts in a crowded trade and the prospect of European QE was questioned in a “leaked” FT document.
  • The yen also continued to rally against the dollar — felt like a “big” buyer (of dollars vs. yen) going out at 118.
  • Some damage done on inflation breakevens, with 5-year breakevens nearing a test of 2010 lows. Fed funds futures noticed the damage and pushed out the 1st hike 1 month today.
  • Greek fears are still weighing on the market. Shares of the National Bank of Greece are down 18% in 2 days. The ‘GREK’ ETF tracking Greek stocks is down 10%.
  • Breaking Tuesday’s support level in the S&P 500 set off some stop-losses. 2,025 is a key level for the bulls going forward.
  • US homebuilders sold off after the Toll Brothers’ quarterly report and comments regarding “zero pricing power” to improve gross margins.
  • Market-on-close orders came in weak, with $US2.3 billion coming up for sale into the close. Can’t blame the late day sell off on oil. High yield looks to have bottomed at around 2:45 pm ET. The close was an exodus from financials: regional banks were off 3.2% on double normal volume.

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