| | | Stocks retreat after airstrike kills top Iranian military leader
03-Jan-20 16:15 ET
Dow -233.92 at 28634.79, Nasdaq -71.42 at 9020.79, S&P -23.00 at 3234.85
briefing.com
[BRIEFING.COM] The S&P 500 declined 0.7% on Friday after a U.S. airstrike killed Iran's top military commander, General Suleimani, prompting retaliatory threats from Iran and some profit taking in the stock market. The Dow Jones Industrial Average lost 0.8%, the Nasdaq Composite lost 0.8%, and the Russell 2000 lost 0.4%.
President Trump said the U.S. was not trying to start a war or seek regime change in Iran, but the situation did provide an excuse for investors to reduce exposure from a market trading at record highs. In addition, the weakest reading for the ISM Manufacturing Index since June 2009, which declined to 47.2% in December (Briefing.com consensus 49.0%) from 48.1% in November, also helped restrain risk sentiment.
Cyclical sectors were among today's laggards, with the S&P 500 materials (-1.6%), financials (-1.1%), and information technology (-1.1%) sectors leading the retreat. Conversely, the rate-sensitive real estate (+0.8%) and utilities (+0.1%) sectors benefited from the defensive positioning in Treasuries that drove yields lower.
The 2-yr yield fell six basis points to 1.51%, and the 10-yr yield fell nine basis points to 1.79%. The U.S. Dollar Index increased 0.1% to 96.90.
Given the geopolitical angst, investors also saw some opportunities in WTI crude ($63.03, +1.88, +3.1%) on possible disruptions to production and in the iShares Dow Jones U.S. Aerospace & Defense ETF (ITA 229.98, +2.60, +1.1%) on speculation of increased government spending. Gold futures increased 1.6% to $1552.40/ozt.
Notable story stocks included Tesla (TSLA 443.01, +12.75, +3.0%) after it beat fourth quarter delivery estimates, Lamb Weston (LW 93.56, +9.47, +11.3%) after it beat top and bottom-line estimates, and Incyte (INCY 77.90, 8.07, -9.4%) after providing disappointing results for a promising drug candidate.
Separately, the FOMC Minutes from the Dec. 10-11 meeting went largely unnoticed today, which wasn't too surprising considering that the 2019 committee viewed policy as appropriate unless the economic outlook changes.
Reviewing Friday's economic data, which included the ISM Manufacturing Index for December and the Construction Spending report for November:
- The ISM Manufacturing Index for December registered a 47.2% reading (Briefing.com consensus 49.0%). That was below the 48.1% reading for November, the fifth straight sub-50.0% reading, and the lowest level for the index since June 2009.
- The key takeaway from the report is that the conditions remain weak in the manufacturing sector, although there might be a tendency to dismiss the dour December reading in favor of the view that the easing of trade tension between the U.S. and China could lead to better manufacturing activity in 2020.
- Total construction spending increased 0.6% m/m in November (Briefing.com consensus +0.3%) on the heels of an upwardly revised 0.1% increase (from -0.8%) in October. Residential spending was up 1.8% m/m and nonresidential spending was down 0.3% m/m.
- The key takeaway from the report is that new single-family construction (+1.2%) was the main driver of the pickup in residential spending.
Investors will not receive any notable economic data on Monday.
- Nasdaq Composite +0.5% YTD
- Dow Jones Industrial Average +0.3% YTD
- S&P 500 +0.1% YTD
- Russell 2000 -0.5% YTD
Market Snapshot
| Dow | 28634.79 | -233.92 | (-0.81%) | | Nasdaq | 9020.79 | -71.42 | (-0.79%) | | SP 500 | 3234.85 | -23.00 | (-0.71%) | | 10-yr Note | +30/32 | 1.791 |
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| | NYSE | Adv 1345 | Dec 1482 | Vol 932.1 mln | | Nasdaq | Adv 1146 | Dec 2048 | Vol 2.9 bln |
Industry Watch
| Strong: Utilities, Real Estate |
| | Weak: Materials, Financials, Information Technology |
Moving the Market
-- Stocks close lower after U.S. airstrike kills Iran's top military leader
-- ISM Manufacturing Index for December comes in weaker than expected
-- Oil, gold, Treasuries, and VIX gain
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WTI crude gains 3% on geopolitical angst
03-Jan-20 15:25 ET
Dow -204.18 at 28664.53, Nasdaq -54.97 at 9037.24, S&P -18.63 at 3239.22
[BRIEFING.COM] The S&P 500 currently trades lower by 0.5% after President Trump recently said the U.S. is not seeking to start war with Iran, or seek a regime change, in a press conference.
Reviewing the S&P 500 sectors shows the materials (-1.2%), financials (-1.1%), and consumer discretionary (-0.9%) sectors continuing to lead the retreat, while the real estate (+0.7%) and utilities (+0.2%) sectors are the lone groups in the green.
WTI crude settled up $1.88 (+3.1%) to $63.03/bbl on some speculation that the Middle East angst could disrupt oil production. The gain was relatively modest. |
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