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Stocks close lower following cautious comments from Fed Chair Powell
13-May-20 16:20 ET
Dow -516.81 at 23247.97, Nasdaq -139.38 at 8863.19, S&P -50.12 at 2819.87

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The S&P 500 lost 1.8% on Wednesday in a broad-based decline, as investors respected some cautious commentary from Fed Chair Powell. The Dow Jones Industrial Average declined 2.2%, the Nasdaq Composite declined 1.6%, and the Russell 2000 declined 3.3%.

In his speech prior to the open, Fed Chair Powell said the economic outlook remained highly uncertain and subject to significant downside risks, adding that a recovery may take some time to gather momentum. Mr. Powell also said the Fed can do more to help the financial system but dismissed the notion of implementing negative interest rates.

The S&P 500 did trade in positive territory for a moment after the open, but sellers quickly regained control with losses broadening out to all 11 S&P 500 sectors. The energy (-4.4%) and financials (-3.0%) sectors took the biggest hits, while the consumer staples (-0.9%) and utilities (-0.9%) sectors declined less than 1.0%.

Investors were reminded today that part of the economic uncertainty referenced by Fed Chair Powell included U.S-China tensions and hurdles in COVID-19 testing. The latter was noted by a New York University study that suggested Abbott Lab's (ABT 92.16, -1.64, -1.8%) COVID-19 test is prone to false negatives.

Adding to U.S.-China tensions, the FBI confirmed that China-affiliated cyber actors have targeted U.S. organizations conducting COVID-19-related research. Also, a report out of China indicated that Beijing is mulling punitive countermeasure on the U.S. as a result of lawsuits that are seeking COVID-19-related damages.

Separately, valuation concerns were voiced by a couple of influential names. Legendary investor Stanley Druckenmiller said the risk-reward for equity is maybe as bad as he's seen it in his career. Appaloosa Management's David Tepper told CNBC that he hasn't seen the market this overvalued since 1999.

U.S. Treasuries ended the session slightly higher. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield declined three basis points to 0.65%. The U.S. Dollar Index increased 0.3% to 100.25. WTI crude declined 1.6%, or $0.42, to $25.34/bbl.

Reviewing Wednesday's economic data:

The Producer Price Index for final demand declined 1.3% m/m in April (Briefing.com consensus -0.5%), marking its biggest decrease since records began in December 2009. Most of that decline was attributed to a 3.3% drop in prices for final demand goods.
The Producer Price Index for April may not be convincing enough to the Fed to go down the negative interest rate road, yet the key takeaway is that it will certainly keep it on the path at the lower bound.
The weekly MBA Mortgage Applications Index increased 0.3% following a 0.1% increase in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and Export and Import Prices for April on Thursday.

Nasdaq Composite -1.2% YTD
S&P 500 -12.7% YTD
Dow Jones Industrial Average -18.5% YTD
Russell 2000 -26.1% YTD

Market Snapshot
Dow 23247.97 -516.81 (-2.17%)
Nasdaq 8863.19 -139.38 (-1.55%)
SP 500 2819.87 -50.12 (-1.75%)
10-yr Note -4/32 0.653
NYSE Adv 325 Dec 2594 Vol 1.1 bln
Nasdaq Adv 623 Dec 2620 Vol 4.2 bln

Industry Watch
Strong: Consumer Staples, Utilities
Weak: Financials, Energy, Industrials

Moving the Market

-- Stocks close lower following cautious commentary from Fed Chair Powell

-- Powell cautions about prolonged economic recovery, suggests more stimulus may be needed

-- Broad-based decline with weakness in the energy and financials sectors

-- Valuation concerns, U.S.-China tensions, COVID-19 testing not perfect

WTI crude settles modestly lower
13-May-20 15:25 ET
Dow -671.69 at 23093.09, Nasdaq -232.15 at 8770.42, S&P -74.37 at 2795.62

[BRIEFING.COM] The S&P 500 is down 2.5% to extend its weekly decline to 4.6%.

One last look at the S&P 500 sector shows all sectors down more than 1%. Energy (-4.8%), financials (-3.3%), and industrials (-3.2%) lead the decline, while the consumer staples sector (-1.4%) sector is the down the least.

WTI crude futures settled down $0.42 (-1.6%) to $25.34/bbl.