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Stocks sell off in broad-based de-risking
28-Oct-20 16:20 ET
Dow -943.24 at 26519.89, Nasdaq -426.48 at 11004.80, S&P -119.65 at 3271.03

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

[BRIEFING.COM] The S&P 500 dropped 3.5% on Wednesday, as heightened growth concerns exacerbated de-risking efforts and the recent negative momentum in the market. The Nasdaq Composite fell 3.7%, the Dow Jones Industrial Average fell 3.4%, and the Russell 2000 fell 3.0%.

Similarly, no sector was spared with losses ranging from 2.4% (real estate) to 4.3% (information technology).

The weakness started in the futures market after European markets opened to news that Germany and France were preparing renewed lockdown measures to curb the spread of the coronavirus. Germany's DAX dropped 4.2% on Wednesday, versus a 3.0% decline in the Europe Stoxx 600.

The coronavirus path in the U.S. is tracking in the wrong direction, leaving investors worried that more cities and states could adopt similar measures. With a stimulus deal unlikely to come before the election to mitigate the financial difficulties many businesses and households are facing, the market presumably started to rethink future earnings growth.

Most Q3 earnings reports continued to exceed expectations, but the reactions remained disappointing. Granted, Microsoft (MSFT 202.68, -10.57, -5.0%) did guide revenue for its fiscal second quarter below consensus, and MasterCard (MA 291.38, -25.73, -8.1%) was one the larger companies that missed expectations.

Shares of UPS (UPS 155.78, -15.06, -8.8%) dropped nearly 9% despite beating top and bottom-line estimates. The Dow Jones Transportation Average fell 4.3%.

If that wasn't enough to deter sentiment, Pfizer (PFE 35.45, -1.98, -5.3%) delayed the release of its Phase 3 vaccine trial results, which were expected this week, and the CEOs of Alphabet (GOOG 1516.62, -87.64, -5.5%), Facebook (FB 267.67, -15.62, -5.5%), and Twitter (TWTR 48.56, -2.71, -5.3%) testified before the Senate Commerce Committee on Section 230 of the Communications Decency Act.

Interestingly, longer-dated Treasuries gave up early gains to close little changed. The 2-yr yield and 10-yr yield both finished flat at 0.15% and 0.78%, respectively. The U.S. Dollar Index advanced 0.6% to 93.46. WTI crude futures fell 5.3%, or $2.10, to $37.45/bbl amid the stronger dollar, bearish inventory data, and demand concerns.

Separately, the weekly MBA Mortgage Applications Index increased 1.7% following a 0.6% decline in the prior week.

Looking ahead, investors will receive the advance estimate for Q3 GDP, the weekly Initial and Continuing Claims report, and Pending Home Sales for September on Thursday.

Nasdaq Composite +22.7% YTD
S&P 500 +1.3% YTD
Dow Jones Industrial Average -7.1% YTD
Russell 2000 -7.5% YTD

Market Snapshot
Dow 26519.89 -943.24 (-3.43%)
Nasdaq 11004.80 -426.48 (-3.73%)
SP 500 3271.03 -119.65 (-3.53%)
10-yr Note 0/32 0.775
NYSE Adv 266 Dec 2775 Vol 1.1 bln
Nasdaq Adv 470 Dec 2935 Vol 3.8 bln

Industry Watch
Strong: Real Estate
Weak: Information Technology, Energy, Communication Services, Consumer Discretionary

Moving the Market

-- Sell-off on Wall Street amid increasing growth concerns and negative momentum

-- Stimulus deal not likely before the election, prospect of more business restrictions

-- Microsoft (MSFT) issued below-consensus revenue guidance

WTI crude futures fall 5%
28-Oct-20 15:30 ET
Dow -760.77 at 26702.36, Nasdaq -318.52 at 11112.76, S&P -91.81 at 3298.87

[BRIEFING.COM] The S&P 500 is off session lows with a 2.7% decline. Nevertheless, today's retreat has erased the benchmark index's monthly gain.

One last look at the S&P 500 sectors shows information technology (-3.2%) and energy (-3.4%) down over 3.0%, while the real estate (-1.8%) and financials (-1.9%) sectors are down less than 2.0%.

WTI crude futures settled sharply lower by 5.3%, or $2.10, to $37.45/bbl. A stronger dollar, bearish inventory data, and demand concerns undercut prices.