Mega-caps take market lower
23-Jul-20 16:20 ET
Dow -353.51 at 26652.33, Nasdaq -244.71 at 10461.50, S&P -40.36 at 3235.66
briefing.com
[BRIEFING.COM] The S&P 500 fell 1.2% on Thursday, as noticeable selling in the mega-cap stocks during the afternoon took the market lower. The Nasdaq Composite fell 2.3%, and the Dow Jones Industrial Average fell 1.3%. The Russell 2000, however, was unscathed with a flat reading.
Eight of the 11 S&P 500 sectors closed lower, including the information technology (-2.6%), consumer discretionary (-2.0%), and communication services (-2.0%) sectors at the bottom of the standings amid the mega-cap declines, while the consumer staples (+0.2%), financials (+0.2%), and utilities (+0.1%) sectors closed higher.
Microsoft (MSFT 202.54, -9.21, -4.4%) and Tesla (TSLA 1513.07, -79.26, -5.0%) both reported better-than-expected earnings results, but the disappointing price action appeared to cause concern about similar reactions in Apple (AAPL 371.38, -17.71, -4.6%), Amazon (AMZN 2986.55, -113.36, -3.7%), Alphabet (GOOG 1515.68, -52.81, -3.4%), and Facebook (FB 232.60, -7.27, -3.0%) when they report.
On a related note, Goldman Sachs reportedly doubled down on its recommendation to "avoid" Apple due to a view that its recent surge won't be sustainable after earnings. That's a controversial view on Wall Street, but it evoked an understanding that many of these mega-cap stocks have had great runs and could be subject to a pullback.
In other developments, weekly initial jobless claims increased by 109,000 to 1.416 million (Briefing.com consensus 1.285 million), China's Global Times editor tweeted that China will likely announce countermeasures on Friday if they are forced to close the consulate in Houston, and Treasury Secretary Mnuchin said the GOP unemployment benefit plan will be based on 70% wage replacement.
Aside from Microsoft and Tesla, the earnings picture was mostly mixed. Dow components Travelers (TRV 118.61, -3.63, -3.0%) and Dow Inc. (DOW 42.82, -1.52, -3.4%) moved lower after earnings, while Twitter (TWTR 38.44, +1.50, +4.1%), Kimberly Clark (KMB 147.33, +3.03, +2.1%), and Cintas (CTAS 303.01, +13.65, +4.7%) moved higher.
U.S. Treasuries finished the session mixed. The 2-yr yield increased two basis points to 0.15%, while the 10-yr yield declined one basis point to 0.59%. The U.S. Dollar Index weakened by another 0.2% to 94.81. WTI crude futures fell 2.0%, or $0.83, to $41.05/bbl.
Reviewing Thursday's economic data, which included the weekly Initial and Continuing Claims report:
- Initial jobless claims for the week ending July 18 increased by 109,000 to 1.416 million (Briefing.com consensus 1.285 million), which is the 18th straight week they have exceeded one million. Continuing claims for the week ending July 11 decreased by 1,107,000 to 16.197 million.
- The key takeaway from the report is that the jump in initial claims is an early reflection of the adverse impact of states pausing or rolling back their reopening activity due to the rise in coronavirus cases. In turn, it is a reminder that the momentum of initial reopening efforts will slow the progress made in labor market recovery efforts.
- The Conference Board's Leading Economic Index increased 2.0% m/m in June (Briefing.com consensus 2.1%) following an upwardly revised 3.2% increase (from 2.8%) in May. At 102.0, the index level is 8.8% below the level it hit in February.
- The key takeaway from the report is the recognition that the index decreased 8.4% for the six-month span through June, with only one out of its ten components increasing over that period.
Looking ahead, investors will receive New Home Sales for June on Friday.
- Nasdaq Composite +16.6% YTD
- S&P 500 +0.2% YTD
- Dow Jones Industrial Average -6.6% YTD
- Russell 2000 -10.7% YTD
Market Snapshot
| Dow | 26652.33 | -353.51 | (-1.31%) | | Nasdaq | 10461.50 | -244.71 | (-2.29%) | | SP 500 | 3235.66 | -40.36 | (-1.23%) | | 10-yr Note | +1/32 | 0.589 |
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| | NYSE | Adv 1413 | Dec 1520 | Vol 820.6 mln | | Nasdaq | Adv 1242 | Dec 1978 | Vol 4.4 bln |
Industry Watch
| Strong: Utilities, Consumer Staples, Financials |
| | Weak: Communication Services, Information Technology, Consumer Discretionary |
Moving the Market
-- Stock market turned lower in afternoon trade amid selling in the mega-caps
-- Disappointing earnings reactions in Microsoft (MSFT) and Tesla (TSLA)
-- Initial jobless claims for the week ending July 18 increased by 109,000 to 1.416 million (Briefing.com consensus 1.285 million)
-- Lingering U.S.-China tensions
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WTI crude futures settle lower by 2%
23-Jul-20 15:25 ET
Dow -375.82 at 26630.02, Nasdaq -238.74 at 10467.47, S&P -41.56 at 3234.46
[BRIEFING.COM] The S&P 500 is down 1.2%, and the Russell 2000 is down 0.1%.
One last look at the S&P 500 sectors shows information technology (-2.6%), communication services (-2.0%), and consumer discretionary (-1.8%) down noticeably, while the financials (+0.04%) and consumer staples (+0.1%) sectors cling onto fractional gains.
WTI crude futures settled lower by $0.83 (-2.0%) to $41.05/bbl. |
