Stocks pull back meaningfully, close near lows
11-Jun-20 16:15 ET
Dow -1861.80 at 25128.19, Nasdaq -527.62 at 9492.75, S&P -188.04 at 3001.97
briefing.com
[BRIEFING.COM] The S&P 500 dropped 5.9% on Thursday, pulling back noticeably from an overheated market condition. The Dow Jones Industrial Average (-6.9%) and Russell 2000 (-7.6%) underperformed the benchmark index, while the Nasdaq Composite declined 5.3%.
The S&P 500 opened the session down 2.1%, ostensibly due to growth worries following a cautious FOMC statement yesterday and reports of increasing rates of coronavirus cases in many U.S. states. The market had rallied despite these growth concerns, though, as the S&P 500 gained as much as 48% from its March 23 low.
Today, then, might have been the day to take profits, which some might say was long overdue. Buyers were largely absent, causing the market to decline in an orderly retreat throughout the day. No sector was spared, with all 11 S&P 500 sectors closing lower between 3.8% (consumer staples) and 9.5% (energy).
Evidently, selling was indiscriminate, but value and cyclical stocks, which were among the leaders on the way up, were hit the hardest for the third straight day. Energy stocks were additionally burdened by the 8% drop in oil prices ($36.41/bbl, -3.13, -7.9%), while those in the financials sector (-8.2%) were pressured by some curve-flattening activity.
The 2-yr yield declined one basis point to 0.16%, while the 10-yr yield declined ten basis points to 0.65% as investors sought some safety in longer-dated maturities. The U.S. Dollar Index rose 0.8% to 96.76.
Notably, the CBOE Volatility Index spiked 48.0% to 40.79, which reflected increased hedging interest against further equity weakness. The S&P 500 did end the session below its 200-day moving average (3013), which is a key technical level many traders observe.
In corporate news, Regeneron Pharma (REGN 596.16, -10.43, -1.7%) said it started clinical trials for its COVID-19 antibody treatment. GrubHub (GRUB 61.79, +2.74, +4.6%) agreed to be acquired by Just Eat Takeaway (TKAYY 9.30, -0.70, -7.0%) for $75.15/share in an all-stock deal.
Reviewing Thursday's economic data:
- Initial jobless claims for the week ending June 6 decreased by 355,000 to a still-high 1.542 million (Briefing.com consensus 1.525 million) while continuing claims for the week ending May 30 decreased by 339,000 to a still stunningly high 20.929 million.
- The key takeaway from this report is that, notwithstanding the hiring activity in May, it shows the labor market remains a long, long way from being back.
- The Producer Price Index for final demand increased 0.4% m/m in May (Briefing.com consensus +0.1%). The index for final demand, excluding food and energy, declined 0.1% (Briefing.com consensus 0.0%). Those readings left the yr/yr rates at -0.8% and 0.3%, respectively.
- The key takeaway from this report is that it shows why the Fed isn't thinking about raising rates anytime soon.
Looking ahead, investors will receive the preliminary University of Michigan Index of Consumer Sentiment for June and Export and Import Prices for May on Friday.
- Nasdaq Composite +5.8% YTD
- S&P 500 -7.1% YTD
- Dow Jones Industrial Average -12.0% YTD
- Russell 2000 -18.7% YTD
Market Snapshot
| Dow | 25128.19 | -1861.80 | (-6.90%) | | Nasdaq | 9492.75 | -527.62 | (-5.27%) | | SP 500 | 3001.97 | -188.04 | (-5.89%) | | 10-yr Note | +6/32 | 0.663 |
|
| | NYSE | Adv 86 | Dec 2859 | Vol 1.3 bln | | Nasdaq | Adv 240 | Dec 3130 | Vol 5.2 bln |
Industry Watch
| Strong: None |
| | Weak: Energy, Financials, Industrials, Materials |
Moving the Market
-- Market pulls back about 5%, cooling down from overheated condition
-- Value and cyclical stocks lag, especially those in the energy sector amid a sharp pullback in oil prices
-- Decline is ostensibly based on cautious outlook from Fed and reports of increasing rates of coronavirus cases
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WTI crude pulls back 8%
11-Jun-20 15:25 ET
Dow -1806.50 at 25183.49, Nasdaq -491.35 at 9529.02, S&P -179.92 at 3010.09
[BRIEFING.COM] The S&P 500 is down 5.7%, and the Russell 2000 is down 6.9%.
One last look at the S&P 500 sectors shows big losses across the board. The energy sector is down the most with a 8.9% decline, while the consumer staples sector is down the least with a 3.5% decline.
WTI crude futures dropped 7.9%, or $3.13, to $36.41/bbl as oil prices pulled back alongside stocks. |
