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Cyclical stocks lead market lower, but tech stocks limit decline
21-Sep-20 16:15 ET
Dow -509.72 at 27137.70, Nasdaq -14.48 at 10778.82, S&P -38.41 at 3281.06

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

[BRIEFING.COM] The S&P 500 declined 1.2% on Monday, although it was down as much as 2.7% intraday as increased uncertainty on the political, trade, and health fronts fueled economic growth concerns. The Nasdaq Composite declined just 0.1% amid relative strength in technology stocks, while the Dow Jones Industrial Average (-1.8%) and Russell 2000 (-3.4%) underperformed.

Political uncertainty was a big theme following the passing of Supreme Court Justice Ginsburg, as many suggested lawmakers would focus less on stimulus talks and more on a new appointee. Trade uncertainty was based on China updating its trade blacklist without naming any affected companies. Health uncertainty stemmed from the rising COVID-19 cases in Europe, raising the specter of shutdowns.

The ensuing weakness disproportionately affected the cyclical sectors -- industrials (-3.4%), materials (-3.4%), and energy (-3.3%) -- but the information technology sector (+0.8%) did partially benefit from the growth concerns. The tech sector, led by Apple (AAPL 110.08, +3.24, +3.0%), was the only sector to close higher on Monday.

Notably, at its low today, the S&P 500 was down 10.0% from the record high it set earlier this month -- a decline often described as a "correction." This might have been the green light for many investors and traders to buy the dip in the last hour of trading.

Within the financials sector (-2.5%), banks were under pressure amid reports that several global institutions, including JPMorgan Chase (JPM 95.31, -3.04, -3.1%) and Deutsche Bank (DB 8.34, -0.75, -8.3%), moved more than $2 trillion in illicit funds for a period of nearly 20 years despite red flags.

Separately, shares of Oracle (ORCL 60.82, +1.07, +1.8%) and Walmart (WMT 137.07, +1.78, +1.3%) gained more than 1% on expectations that a TikTok deal will be approved. Microsoft (MSFT 202.54, +2.15, +1.1%) agreed to acquire ZeniMax Media for $7.5 billion in cash. Illumina (ILMN 270.13, -25.37, -8.6%) agreed to acquire Grail for $8 billion in cash and stock.

U.S. Treasuries finished higher on the longer-end of the curve. The 2-yr yield increased one basis point to 0.14%, while the 10-yr yield declined two basis points to 0.67%. The U.S. Dollar Index rose 0.7% to 93.56. WTI crude futures fell 3.9%, or $1.63, to $39.69/bbl.

Investors did not receive any economic on Monday. Looking ahead, the Existing Home Sales report for August will be released on Tuesday.

Nasdaq Composite +20.1% YTD
S&P 500 +1.6% YTD
Dow Jones Industrial Average -4.9% YTD
Russell 2000 -11.0% YTD

Market Snapshot
Dow 27137.70 -509.72 (-1.84%)
Nasdaq 10778.82 -14.48 (-0.13%)
SP 500 3281.06 -38.41 (-1.16%)
10-yr Note +3/32 0.672
NYSE Adv 439 Dec 2556 Vol 1.2 bln
Nasdaq Adv 639 Dec 2666 Vol 3.8 bln

Industry Watch
Strong: Information Technology
Weak: Energy, Materials, Industrials, Financials, Real Estate