Stocks accelerate losses into close
12-May-20 16:20 ET
Dow -457.21 at 23764.78, Nasdaq -189.79 at 9002.57, S&P -60.20 at 2869.99
briefing.com
[BRIEFING.COM] The S&P 500 fell 2.1% on Tuesday, with a bulk of losses coming in afternoon trade and into the close. The Dow Jones Industrial Average (-1.9%) and Nasdaq Composite (-2.1%) declined comparably to the benchmark index, while the Russell 2000 underperformed with a 3.5% decline.
There wasn't one specific catalyst driving stocks lower, but profit-taking interest might have been fueled by legislation put forth by Senate Republicans to impose sanctions on China and by Los Angeles reportedly planning to extend the county's stay-at-home order for another three months.
News of the Senate proposal did seem to initiate the selling in the market, which had been trading flat beforehand. The LA news also coincided with the late-day selling, as it paid heed to NIAID Director Fauci's Senate testimony in which he cautioned about reopening the economy too soon.
It's unclear if the market was truly perturbed by the news or if it provided a good excuse for some overdue selling. In either case, all 11 S&P 500 sectors closed in negative territory, led lower by the real estate (-4.3%), industrials (-2.8%), and financials (-2.7%) sectors. The consumer staples (-0.9%) and utilities (-0.9%) sectors declined the least.
Bank and airline stocks were among today's the weakest performers, which was made evident in sharp declines in the SPDR S&P Bank ETF (KBE 27.51, -1.45, -5.0%) and the U.S. Global Jets ETF (JETS 12.68, -0.57, -4.3%).
Bank stocks were pressured by a modest decline in Treasury yields and by President Trump rehashing calls for negative interest rates. Airline stocks were pressured by Boeing (BA 125.22, -3.69, -2.9%) CEO Calhoun telling NBC's "Today" show that a major U.S. airline could go bankrupt because of COVID-19 disruptions.
Conversely, shares of Uber (UBER 32.40, +0.76, +2.4%) and GrubHub (GRUB 60.39, +13.60, +29.1%) exhibited strength after it was reported that Uber made a bid to acquire GrubHub.
As previously noted, U.S. Treasury yields declined amid an uptick in demand for the safe-haven asset. The 2-yr yield declined two basis points to 0.16%, and the 10-yr yield declined five basis points to 0.68%. The U.S. Dollar Index declined 0.3% to 99.97. WTI crude rose 5.3%, or $1.30, to $25.76/bbl.
Reviewing Tuesday's economic data:
- The Consumer Price Index declined 0.8% m/m in April, as expected, while core CPI, which excludes food and energy, declined 0.4% (Briefing.com consensus -0.2%). That was the largest drop in total CPI since December 2008 and the largest drop on record going back to 1957 for core CPI.
- The key takeaway from the report is that it is a telltale reminder that the Federal Reserve isn't moving off the zero bound anytime soon.
- The Treasury Budget for April showed a deficit of $737.85 billion versus a surplus of $160.3 billion in the same period a year ago.
- The key takeaway from the report is that the huge swing in the budget was a function of the tax filing deadline being extended, and government spending surging, due to stimulus measures employed in response to the COVID-19 impact.
- The NFIB Small Business Optimism Index for April declined to 90.9 from 96.4 in March.
Looking ahead, investors will receive the Producer Price Index for April and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +0.3% YTD
- S&P 500 -11.2% YTD
- Dow Jones Industrial Average -16.7% YTD
- Russell 2000 -23.6% YTD
Market Snapshot
| Dow | 23764.78 | -457.21 | (-1.89%) | | Nasdaq | 9002.57 | -189.79 | (-2.06%) | | SP 500 | 2869.99 | -60.20 | (-2.05%) | | 10-yr Note | +4/32 | 0.671 |
|
| | NYSE | Adv 686 | Dec 2172 | Vol 939.5 mln | | Nasdaq | Adv 947 | Dec 2301 | Vol 4.3 bln |
Industry Watch
| Strong: Consumer Staples, Health Care |
| | Weak: Real Estate, Financials, Industrials |
Moving the Market
-- Stock market closes lower, losses accelerated into the close
-- Senate Republicans put forth legislation to impose sanctions on China, LA county will reportedly extend stay-at-home order for three months
-- Bank and airline stocks were among laggards
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Stocks extend losses, WTI crude gains 5%
12-May-20 15:25 ET
Dow -205.57 at 24016.42, Nasdaq -79.93 at 9112.43, S&P -30.33 at 2899.86
[BRIEFING.COM] The S&P 500 has extended losses and is now down 1.1%. All 11 S&P 500 sectors are now trading lower.
Reopening the U.S. economy has proved to be an uneven path despite what the stock market has been telegraphing over the few weeks. Earlier, it was reported that Los Angeles county's stay at home order will be extended for the next three months.
WTI crude settled today's session up $1.30 (+5.3%) to $25.76/bbl. |
