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Stocks fall on familiar growth concerns
26-Oct-20 16:15 ET
Dow -649.86 at 27685.65, Nasdaq -189.34 at 11358.87, S&P -64.44 at 3400.95

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

[BRIEFING.COM] The S&P 500 fell 1.9% on Monday on familiar concerns surrounding the economy, although it was down as much as 2.9% intraday. The Nasdaq Composite declined 1.6%, the Dow Jones Industrial Average declined 2.3%, and the Russell 2000 declined 2.2%.

Notably, stimulus talks remained deadlocked, the U.S. set a new record for daily coronavirus cases last Friday, Germany's SAP (SAP 115.02, -34.66, -23.2%) lowered its revenue outlook due to lockdowns and a muted demand recovery, and new U.S. home sales unexpectedly decreased 3.5% m/m to 959,000 in September (Briefing.com consensus 1.022 mln).

Accordingly, the cyclical energy (-3.5%), industrials (-2.5%), materials (-2.5%), and financials (-2.2%) sectors were among the day's laggards but so was the information technology sector (-2.2%), which typically benefits from growth concerns. The utilities sector (-0.1%) finished just below its flat line.

Conversely, longer-dated Treasuries moved higher in a safe-haven bid, which pushed yields lower. The 10-yr yield declined four basis points to 0.80%, while the 2-yr yield was unchanged at 0.16%. The U.S. Dollar Index advanced 0.3% to 93.07. WTI crude futures fell 3.3%, or $1.30, to $38.58/bbl, which weighed on energy stocks.

The stimulus impasse was nothing new for investors, but the continued deadlock was disappointing given the macroenvironment appeared to take an unfortunate turn, which could undercut confidence for consumers and businesses without fiscal support. Note, House Speaker Pelosi said she was still optimistic in reaching an agreement before the election.

Today's steep decline sent the S&P 500 below its 50-day moving average (3408) on a closing basis. The negative price action had some market participants bracing for further downside, evident by the 18% spike in the CBOE Volatility Index (32.46, +4.91, +17.8%).

Dunkin (DNKN 103.10, +14.31, +16.1%) was a notable exception to the negative trend today after confirming it's in talks to be taken private by Inspire Brands for possibly $106.50/share. DNKN shares surged 16%.

Reviewing Monday's economic data:

New home sales decreased to 959,000 in September (Briefing.com consensus 1.022 mln) from a downwardly revised 994,000 (from 1,011,000) in August. This represents a m/m decline of 3.5%, but a yr/yr increase of 32.1%.
The key takeaway from the report is that strong demand for new homes is resulting in higher prices, which in turn impacts affordability.

Looking ahead, investors will receive Durable Goods Orders for September, the Conference Board's Consumer Confidence Index for October, the FHFA Housing Price Index for October, and the S&P Case-Shiller Home Price Index for August on Tuesday.

Nasdaq Composite +26.6% YTD
S&P 500 +5.3% YTD
Dow Jones Industrial Average -3.0% YTD
Russell 2000 -3.8% YTD

Market Snapshot
Dow 27685.65 -649.86 (-2.29%)
Nasdaq 11358.87 -189.34 (-1.64%)
SP 500 3400.95 -64.44 (-1.86%)
10-yr Note +26/32 0.803
NYSE Adv 396 Dec 2636 Vol 826.9 mln
Nasdaq Adv 628 Dec 2784 Vol 3.2 bln

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

Moving the Market

-- Steep losses to start the week, S&P 500 falls below its 50-day moving average (3408)

-- Stimulus talks remain deadlocked, U.S. tallies new record in daily coronavirus cases

-- New home sales unexpectedly decreased in September

-- Weakness in the cyclical stocks

Oil prices fall more than 3%, energy stocks lag
26-Oct-20 15:25 ET
Dow -735.02 at 27600.49, Nasdaq -226.95 at 11321.26, S&P -74.49 at 3390.90

[BRIEFING.COM] The S&P 500 continues to trade lower by 2.2%. Interestingly, the benchmark index is still positive for the month with a 0.9% gain.

One last look at the S&P 500 sectors shows energy (-3.6%), industrials (-2.8%), financials (-2.6%), and materials (-2.7%) leading today's decline, while the utilities sector (+0.1%) is above water in a resilient trade.

WTI crude futures settled sharply lower by 3.3%, or $1.30, to $38.58/bbl.