| | | Stocks suffer steep losses as investors raise cash
23-Sep-20 16:15 ET
Dow -525.05 at 26753.13, Nasdaq -330.65 at 10633.01, S&P -78.65 at 3236.92
briefing.com
[BRIEFING.COM] The S&P 500 dropped 2.4% on Wednesday in a broad-based retreat that reflected cash-raising efforts. The Nasdaq Composite fell 3.0%, the Russell 2000 fell 3.0%, and the Dow Jones Industrial Average fell 1.9%.
All 11 S&P 500 sectors closed sharply lower between 1.1% (health care) and 4.6% (energy), and traditional safe-haven assets did not see the usual appreciation in times of equity weakness. U.S. Treasuries were little changed, gold futures fell 2.0% to $1868.90/ozt, and the Japanese yen fell 0.5% against the dollar (94.35, +0.36, +0.4%).
It didn't start this way. The session had begun on a high note, as the market reacted positively to Johnson & Johnson (JNJ 144.44, +0.23, +0.2%) advancing its COVID-19 vaccine candidate to Phase 3 trials and Nike (NKE 127.11, +10.24, +8.8%) blowing past quarterly results and raising its FY21 revenue guidance.
An initial weakness in the mega-cap stocks, however, gradually spilled over to the broader market, and the negative price action appeared to reinforce the idea that the market's recent pullback may not yet have run its course. The CBOE Volatility Index increased 6.4% to 28.58, which was a relatively modest gain.
Losses steepened in the afternoon without much interest to buy the dip. Shares of Apple (AAPL 107.12, -4.69, -4.2%) fell 4% while Tesla (TSLA 380.36, -43.87, -10.3%) fell 10% post-Battery Day. On a related note, UBS resumed coverage on Apple with a Neutral rating, versus a prior Buy rating.
Separately, the House passed a government funding bill through Dec. 11 that the Senate is expected to pass later this week. Notwithstanding this piece of good news, general uncertainty surrounding the election, the coronavirus, and the economy likely increased the cash appeal.
U.S. Treasuries, as previously mentioned, finished near their flat lines. The 2-yr yield was unchanged at 0.13%, and the 10-yr yield increased one basis point to 0.68%. WTI crude futures gained 1.0%, or $0.39, to $39.94/bbl but retraced those gains after the settlement time.
Reviewing Wednesday's economic data:
- The FHFA Housing Price Index for September increased 1.0% following an upwardly revised 1.0% increase in August (from +0.9%).
- The weekly MBA Mortgage Applications Index increased 6.8% following a 2.5% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report and New Home Sales for August on Thursday.
- Nasdaq Composite +18.5% YTD
- S&P 500 +0.2% YTD
- Dow Jones Industrial Average -6.2% YTD
- Russell 2000 -13.0% YTD
Market Snapshot
| Dow | 26753.13 | -525.05 | (-1.92%) | | Nasdaq | 10633.01 | -330.65 | (-3.02%) | | SP 500 | 3236.92 | -78.65 | (-2.37%) | | 10-yr Note | 0/32 | 0.674 |
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| | NYSE | Adv 318 | Dec 2648 | Vol 1.0 bln | | Nasdaq | Adv 523 | Dec 2852 | Vol 4.0 bln |
Industry Watch
| Strong: Health Care |
| | Weak: Information Technology, Energy, Communication Services, Materials |
Moving the Market
-- Stocks suffer steep losses amid general uncertainty, cash-raising efforts
-- Broad-based retreat, mega-caps were an influential drag
-- Encouraging vaccine update from Johnson & Johnson (JNJ)
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