| | | Stocks end week on risk-averse note
18-Sep-20 16:15 ET
Dow -244.56 at 27647.42, Nasdaq -116.99 at 10793.30, S&P -37.54 at 3319.47
briefing.com
[BRIEFING.COM] The S&P 500 fell 1.1% on this quadruple-witching expiration Friday, as losses spread out from technology stocks to all 11 S&P 500 sectors. The Nasdaq Composite also declined 1.1%, followed by the Dow Jones Industrial Average (-0.9%) and Russell 2000 (-0.4%).
At first, losses were concentrated in the mega-cap/growth/momentum stocks in a continuation trade from the past few sessions. Options-expiration related activity was a likely factor that exacerbated the downwards momentum, but the most obvious factor was the U.S. prohibiting downloads of TikTok and WeChat after Sunday.
Many viewed the download ban as a negotiation tactic to get a revised deal between Oracle (ORCL 59.75, -0.43, -0.7%) and TikTok that better protects U.S. data. Tencent's WeChat called the decision "unfortunate" and said it will continue to discuss solutions with the U.S., but there were still concerns about potential retaliation against U.S. technology companies.
The information technology sector (-1.7%) exerted influential weakness as a result, and an early rotational trade into cyclical/value stocks lost some stream as tech stocks accelerated losses. The materials (-1.7%), utilities (-1.8%), and real estate (-2.0%) sectors were other laggards, while the health care (-0.1%) and financials (-0.2%) sectors outperformed on a relative basis.
The market did close off session lows, thanks to a buy-the-dip mindset in the afternoon, but it's worth noting that the S&P 500 closed below its 50-day moving average (3343).
Tesla (TSLA 442.15, +18.72, +4.4%) was a notable exception to the negative trend, rising 4.4% after Piper Sandler raised its price target on the stock to $515 from $480 ahead of its Battery Day event next week.
U.S. Treasuries finished little changed in a tight-ranged session. The 2-yr yield remained unchanged at 0.13%, and the 10-yr yield increased one basis point to 0.69%. The U.S. Dollar Index was flat at 92.95. WTI crude futures increased 0.2% to $41.09/bbl, bringing its weekly gain to 10%.
Reviewing Friday's economic data:
- The final University of Michigan Index of Consumer Sentiment for August ticked up to 74.1 (Briefing.com consensus 72.8) from the preliminary reading of 72.8. The final reading for July was 72.5.
- The key takeaway from the report is that consumer sentiment has been slow to rebound and that the incremental improvement seen has been based simply on the view that things couldn't get worse than they were at the depths of the shutdown period.
- The Conference Board's Leading Economic Index (LEI) increased 1.2% in August (Briefing.com consensus 1.4%) following an upwardly revised 2.0% increase (from 1.4%) in July. The increase for August represents the fourth straight month the index has been positive after declining 7.4% in March and 6.3% in April.
- The key takeaway from the report is the understanding that, despite four straight increases, more repair work is necessary. At 106.5, the index is still 4.7% below the level seen in February.
- The current account deficit for the second quarter totaled $170.5 billion (Briefing.com consensus -$146.3 billion). The first quarter deficit was revised to $111.5 billion from $104.2 billion.
Investors will not receive any notable economic data on Monday.
- Nasdaq Composite +20.3% YTD
- S&P 500 +2.8% YTD
- Dow Jones Industrial Average -3.1% YTD
- Russell 2000 -7.9% YTD
Market Snapshot
| Dow | 27647.42 | -244.56 | (-0.88%) | | Nasdaq | 10793.30 | -116.99 | (-1.07%) | | SP 500 | 3319.47 | -37.54 | (-1.12%) | | 10-yr Note | 0/32 | 0.694 |
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| | NYSE | Adv 1019 | Dec 1917 | Vol 3.2 bln | | Nasdaq | Adv 1594 | Dec 1649 | Vol 5.7 bln |
Industry Watch
| Strong: Financials, Health Care |
| | Weak: Information Technology, Real Estate, Utilities, Materials |
Moving the Market
-- Stocks end week on lower note, broad-based losses
-- Influential weakness in the tech sector amid TikTok download ban, options-expiration activity, valuation concerns
-- Financial stocks outperformed on a relative basis
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