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Tough day for stocks, mega-caps led retreat
08-Sep-20 16:10 ET
Dow -632.42 at 27490.89, Nasdaq -465.44 at 10847.70, S&P -95.12 at 3331.84

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

[BRIEFING.COM] The S&P 500 fell 2.8% on Tuesday in a broad-based retreat led by the mega-cap stocks. The Nasdaq Composite underperformed with a 4.1% decline, while the Dow Jones Industrial Average (-2.3%) and Russell 2000 (-2.0%) declined closer to 2.0%.

Today's selling was largely a continuation of last week, but unlike Friday, buyers appeared unwilling to buy the dip. Apple (AAPL 112.82, -8.14, -6.7%) and Tesla (TSLA 330.21, -88.11, -21.1%), which led the market on the way up, led the market lower today, with Tesla shareholders discontent that the S&P 500 Index Committee snubbed the stock from the benchmark index.

Tesla's 21% decline was a drag on the Nasdaq, while Apple's 7% decline pressured the large-cap indices and the S&P 500 information technology sector (-4.6%). The energy (-3.7%) and financials (-2.6%) sectors followed suit amid weaker oil prices ($36.76/bbl, -2.94, -7.4%) and lower Treasury yields, while the utilities sector (-0.6%) declined the least.

Besides concerns that the market's pullback had more room to go, investors had to contend with Democratic leadership rebuffing the Senate's $300 billion coronavirus relief bill, President Trump suggesting disincentives for U.S. companies to outsource jobs to China, and reports that China's largest semiconductor foundry could be added to a trade blacklist.

The prospect of potential retaliation on U.S. semiconductor companies was an additional drag on the Philadelphia Semiconductor Index (-4.7%). Separately, Boeing (BA 161.08, -9.97, -5.8%) provided a disappointing update, saying 787 Dreamliner production problems have slowed the pace of deliveries.

There were some notable winners, though. Nikola (NKLA 50.05, +14.50, +40.8%) and General Motors (GM 32.38, +2.38, +7.9%) formed a strategic partnership that was well-received by investors. Walt Disney (DIS 134.20, +2.21, +1.7%) was upgraded to Buy from Hold at Deutsche Bank.

U.S. Treasuries saw increased buying interest amid the decline in equities but closed off highs. The 2-yr yield declined two basis points to 0.14%, and the 10-yr yield declined four basis points to 0.68%. The U.S. Dollar Index rose 0.8% to 93.46. Oil prices were pressured by Saudi Aramco lowering its prices for buyers in Asia and the U.S. due to sluggish demand.

Reviewing Tuesday's economic data:

Consumer credit increased by $12.3 billion in July (Briefing.com consensus $12.0 billion) after increasing an upwardly revised $11.4 bln (from $8.95 billion) in June.
The key takeaway from the report is that July marked the fifth straight monthly contraction in revolving credit, which is something that hasn't happened since late 2010 - early 2011, underscoring the more restrictive credit stance adopted by lenders in the wake of the COVID shutdown and spike in unemployment.
The NFIB Small Business Optimism Index for August increased to 100.2 from 98.8 in July.

Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the JOLTS - Job Openings report for July on Wednesday.

Nasdaq Composite +20.9% YTD
S&P 500 +3.1% YTD
Dow Jones Industrial Average -3.6% YTD
Russell 2000 -9.8% YTD