Cyclical stocks lead market lower, but tech stocks limit decline
21-Sep-20 16:15 ET
Dow -509.72 at 27137.70, Nasdaq -14.48 at 10778.82, S&P -38.41 at 3281.06
briefing.com
[BRIEFING.COM] The S&P 500 declined 1.2% on Monday, although it was down as much as 2.7% intraday as increased uncertainty on the political, trade, and health fronts fueled economic growth concerns. The Nasdaq Composite declined just 0.1% amid relative strength in technology stocks, while the Dow Jones Industrial Average (-1.8%) and Russell 2000 (-3.4%) underperformed.
Political uncertainty was a big theme following the passing of Supreme Court Justice Ginsburg, as many suggested lawmakers would focus less on stimulus talks and more on a new appointee. Trade uncertainty was based on China updating its trade blacklist without naming any affected companies. Health uncertainty stemmed from the rising COVID-19 cases in Europe, raising the specter of shutdowns.
The ensuing weakness disproportionately affected the cyclical sectors -- industrials (-3.4%), materials (-3.4%), and energy (-3.3%) -- but the information technology sector (+0.8%) did partially benefit from the growth concerns. The tech sector, led by Apple (AAPL 110.08, +3.24, +3.0%), was the only sector to close higher on Monday.
Notably, at its low today, the S&P 500 was down 10.0% from the record high it set earlier this month -- a decline often described as a "correction." This might have been the green light for many investors and traders to buy the dip in the last hour of trading.
Within the financials sector (-2.5%), banks were under pressure amid reports that several global institutions, including JPMorgan Chase (JPM 95.31, -3.04, -3.1%) and Deutsche Bank (DB 8.34, -0.75, -8.3%), moved more than $2 trillion in illicit funds for a period of nearly 20 years despite red flags.
Separately, shares of Oracle (ORCL 60.82, +1.07, +1.8%) and Walmart (WMT 137.07, +1.78, +1.3%) gained more than 1% on expectations that a TikTok deal will be approved. Microsoft (MSFT 202.54, +2.15, +1.1%) agreed to acquire ZeniMax Media for $7.5 billion in cash. Illumina (ILMN 270.13, -25.37, -8.6%) agreed to acquire Grail for $8 billion in cash and stock.
U.S. Treasuries finished higher on the longer-end of the curve. The 2-yr yield increased one basis point to 0.14%, while the 10-yr yield declined two basis points to 0.67%. The U.S. Dollar Index rose 0.7% to 93.56. WTI crude futures fell 3.9%, or $1.63, to $39.69/bbl.
Investors did not receive any economic on Monday. Looking ahead, the Existing Home Sales report for August will be released on Tuesday.
- Nasdaq Composite +20.1% YTD
- S&P 500 +1.6% YTD
- Dow Jones Industrial Average -4.9% YTD
- Russell 2000 -11.0% YTD
Market Snapshot
| Dow | 27137.70 | -509.72 | (-1.84%) | | Nasdaq | 10778.82 | -14.48 | (-0.13%) | | SP 500 | 3281.06 | -38.41 | (-1.16%) | | 10-yr Note | +3/32 | 0.672 |
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| | NYSE | Adv 439 | Dec 2556 | Vol 1.2 bln | | Nasdaq | Adv 639 | Dec 2666 | Vol 3.8 bln |
Industry Watch
| Strong: Information Technology |
| | Weak: Energy, Materials, Industrials, Financials, Real Estate |
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