The Bears Are Back in Town

Carry-over from Friday’s disappointing consumer confidence numbers combined with weak price action in China and other markets to prime U.S. markets for a rough opening. Sure enough, the bears had their day in the sun, with the major market averages plunging at the open and staying sharply in the red throughout the session.

At the close, the Dow Jones Industrial Average (DJIA – 9,135.34) was down 186 points, the S&P 500 Index (SPX – 979.73) dropped 24 points, and the Nasdaq Composite (COMP – 1,930.84) lost 55 points on the day. Meanwhile, the CBOE SPX Volatility Index (VIX) jumped more than 16% as option traders swooped in to bid up straddles and attempt to hedge their bullish positions.

Decliners trounced advancers on the NYSE, 3,250 to 500, while the ratio on the Nasdaq was 2,200 to 500. New highs and new lows were close to parity.

There was no "flight to safety" where commodities were concerned, either, as gold- and oil-related ETFs were among the worst performers of the day. Crude futures closed off 3.7% in Monday’s trading, while gold and silver both suffered modest declines.

Tomorrow morning ahead of the open, we’ll get housing starts numbers for July, along with the Producer Price Index (PPI), which economists are expecting to show a decline of 0.3%. Hitting the earnings confessional will be Home Depot (HD), Saks (SKS), and Hewlett-Packard (HPQ) after the close.