Sector Investing

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Renewed selling sweeps market
10-Sep-20 16:15 ET
Dow -405.89 at 27524.58, Nasdaq -221.97 at 10919.60, S&P -59.77 at 3339.19

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

[BRIEFING.COM] The S&P 500 fell 1.8% on Thursday in a broad-based retreat led by shares of technology and energy companies. The Nasdaq Composite declined 2.0%, the Dow Jones Industrial Average declined 1.5%, and the Russell 2000 declined 1.2%.

The day started with the S&P 500 up 0.8%, and briefly surpassing yesterday's intraday high, on the back of leadership from the mega-caps and growth stocks. The latter might have benefited from an underwhelming weekly initial jobless claims report, which was unchanged at 884,000 (Briefing.com consensus 813,000).

On no specific news, though, these stocks quickly turned around and the selling carried over to the broad market throughout the day. All 11 S&P 500 sectors finished in red, and 29 of the 30 Dow components finished lower.

The information technology (-2.3%) and energy (-3.7%) sectors declined more than the S&P 500, while the materials sector (-0.9%) was a relative outperformer. At one point today, the influential tech sector was up 2.6%.

Some factors that might have pressured sentiment included the inability to sustain yesterday's rebound, suggesting that there was still more selling ahead, and news that the Senate failed to pass its $300 billion coronavirus relief bill. Granted, no one was expecting that bill to get very far, but it reflected the burgeoning pessimism surrounding another relief bill.

As equities steepened losses throughout the afternoon, money flowed into longer-dated U.S. Treasuries in a safety trade. The 2-yr yield increased one basis point to 0.14%, while the 10-yr yield decreased two basis points to 0.69%. The U.S. Dollar Index advanced 0.2% to 93.41. WTI crude futures fell 2.1%, or $0.78, to $37.27/bbl.

Bucking the trend today was RH (RH 385.46, +64.38, +20.1%) after the furniture and home accessories company exceeded quarterly expectations. RH shares surged 20% to fresh record highs.

Reviewing Thursday's economic data:

Initial claims for the week ending September 5 were unchanged at 884,000 (Briefing.com consensus 813,000). Continuing claims for the week ending August 29 increased by 93,000 to 13.385 million.
The key takeaway from the report is that there is nothing worth celebrating about initial claims being under one million when they are just barely under 900,000 nearly six months following the shock of the COVID shutdown phase in March. In the same week a year ago, initial claims were 208,000.
The Producer Price Index for final demand increased 0.3% m/m in August, as expected. The index for final demand, excluding food and energy, increased 0.4% m/m (Briefing.com consensus +0.2%). That left the yr/yr changes at -0.2% and 0.6%, respectively.
The key takeaway from the report is that the soft year-over-year readings will overshadow the stronger month-over-month readings, because the year-over-year numbers play into the Fed's view that it isn't even thinking about thinking about thinking about raising rates.
Wholesale inventories decreased 0.3% in July (Briefing.com consensus -0.1%), versus a prior decline of 1.3% in June.

Looking ahead, investors will receive the Consumer Price Index for August and the Treasury Budget for August on Friday.

Nasdaq Composite +21.7% YTD
S&P 500 +3.4% YTD
Dow Jones Industrial Average -3.5% YTD
Russell 2000 -9.6% YTD