| | | Stocks succumb to late-day selling
19-May-20 16:15 ET
Dow -390.51 at 24206.86, Nasdaq -49.72 at 9185.13, S&P -30.97 at 2922.81
briefing.com
[BRIEFING.COM] The S&P 500 pulled back 1.1% on Tuesday, as stocks succumbed to late-day selling following a negative-sounding vaccine headline. The Dow Jones Industrial Average (-1.6%) and Russell 2000 (-2.0%) declined more than the benchmark index, while the Nasdaq Composite (-0.5%) fared slightly better.
For most of the session, the S&P 500 wavered around its flat line, supported by relative strength in the technology stocks. As the S&P 500 traded at session highs (+0.4%) late in the session, Stat News published a report in which vaccine experts cautioned about Moderna's (MRNA 71.67, -8.33, -10.4%) COVID-19 vaccine candidate due to a lack of critical data provided.
Recall, stocks rallied on Monday after the company said a Phase 1 trial yielded positive results. The negative-sounding headline, then, provided a good excuse for investors to take some profits given the uncertainty that remains.
All 11 S&P 500 sectors finished in negative territory, most notably the financials (-2.5%) and energy (-2.9%) sectors. The consumer discretionary (-0.1%), information technology (-0.4%), and communication services (-0.4%) sectors gave up gains as selling accelerated into the close.
In Washington, Fed Chair Powell and Treasury Secretary Mnuchin testified before the Senate Banking Committee regarding the government response to COVID-19. Mr. Powell reiterated the Fed's commitment to using its full range of tools to support the economy, and Mr. Mnuchin said he's prepared to increase risk and lend more money.
The testimony was not a market-moving event, while several stocks did react to specific corporate news. For example, Dow components Walmart (WMT 124.95, -2.71, -2.1%) and Home Depot (HD 238.10, -7.25, -3.0%) finished lower following their earnings reports.
Separately, Facebook (FB 216.88, +3.69, +1.7%) introduced "Facebook Shops" and "Instagram Shop" to help more businesses go online. Spotify (SPOT 175.03, +13.60, +8.4%) shares climbed 8% after the company reached a deal to exclusively host the Joe Rogan Experience podcast.
U.S. Treasuries ended the session with small gains. The 2-yr yield declined one basis point to 0.18%, and the 10-yr yield declined three basis points to 0.71%. The U.S. Dollar Index declined 0.1% to 99.55. WTI crude rose another 1.5%, or $0.48, to $32.30/bbl.
Reviewing Tuesday's economic data:
- Housing starts fell 30.2% m/m in April to a seasonally adjusted annual rate of 891,000 (Briefing.com consensus 950,000). Building permits were down 20.8% m/m to a seasonally adjusted annual rate of 1.074 million (Briefing.com consensus 1.000 mln).
- The key takeaway from the report is that while building permits exceeded expectations, permits for single-family dwellings decreased 24.3% m/m to 669,000, which points to a slowing market.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +2.4% YTD
- S&P 500 -9.5% YTD
- Dow Jones Industrial Average -15.2% YTD
- Russell 2000 -21.6% YTD
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