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Market closes lower in rare down day this month
12-Nov-20 16:15 ET
Dow -317.46 at 29080.11, Nasdaq -76.84 at 11709.51, S&P -35.65 at 3537.15

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

[BRIEFING.COM] The S&P 500 declined 1.0% on Thursday, as recovery concerns contributed to losses across all 11 sectors and defensive-positioning in Treasuries. The Dow Jones Industrial Average fell 1.1%, and the Russell 2000 fell 1.6%. The Nasdaq Composite was the relative outperformer with a 0.7% decline.

The day started with slight losses amid profit-taking activity in cyclical sectors like energy (-3.4%), materials (-2.2%), and financials (-1.7%) following news that the U.S. recorded new highs for daily coronavirus cases and hospitalizations. Selling picked up more broadly throughout the day on stimulus hurdles and commentary from Fed Chair Powell.

Specifically, Senate Majority Leader McConnell reiterated he was unwilling to pass a larger stimulus package and preferred a smaller targeted bill. This was in response to Senate Minority Leader Schumer (D-NY) rejecting the Senate Republicans' stimulus bill and saying the $2.2 trillion HEROES Act should be the starting point.

Unless lawmakers make concessions, this persistent disagreement suggests that the market might have to wait until at least Jan. 5 for a better indication on the size of a stimulus deal. That's because of the two election runoffs in Georgia that will determine if Republicans retain their majority in the Senate.

What's more, Fed Chair Powell warned that the economy will be challenging for the next few months amid uncertainty surrounding the distribution of a vaccine and the negative effects the coronavirus is having on households and businesses. On a related note, the City of Chicago issued a stay at home "advisory" for 30 days.

All in all, today's news flow wasn't constructive for a market some would describe as overextended in terms of pricing in a recovery. Prior to today, the S&P 500 was up 9.3% this month. Defensive undertones were manifested in the relative outperformances of the consumer staples sector (-0.2%) and the mega-cap/growth/stay-at-home stocks.

The retreat in longer-dated Treasury yields was a supportive consideration for the highly-valued growth stocks. Increased demand sent the 10-yr yield down eight basis points to 0.89%, while the 2-yr yield decreased one basis point to 0.17%. The U.S. Dollar Index decreased 0.1% to 92.95. WTI crude futures decreased 0.8% to $41.49/bbl.

Reviewing Thursday's economic data:

The Consumer Price Index was unchanged month-over-month in October, as was the core Consumer Price Index, which excludes food and energy. The Briefing.com consensus estimate called for both to be up 0.2%.
The key takeaway from the report is that the trend in consumer inflation moved away from the Fed's aim of lifting the average inflation rate, making it an interest-rate friendly report.
Initial jobless claims decreased by 48,000 for the week ending November 7 to 709,000 (Briefing.com consensus 740,000) while continuing claims for the week ending October 31 decreased by 436,000 to 6.786 million.
While the downward trend in initial claims is nice to see, the key takeaway is that market participants have reason to think, with the announcement of new curfews and restrictions on business activity in many cities and states due to rising coronavirus infections, that there could be a pickup in jobless claims in coming weeks.
The Treasury Budget showed a $284 bln deficit in October, which begins the government's fiscal 2021.
The key takeaway from the report is that it shows the very high cost of dealing with the fallout from the pandemic, as the deficit this October was more than twice the deficit seen in October 2019.

Looking ahead, investors will receive the Producer Price Index for October and the preliminary Univ. of Michigan Index of Consumer Sentiment for November on Friday.

Nasdaq Composite +30.5% YTD
S&P 500 +9.5% YTD
Russell 2000 +2.4% YTD
Dow Jones Industrial Average +1.9% YTD

Market Snapshot
Dow 29080.11 -317.46 (-1.08%)
Nasdaq 11709.51 -76.84 (-0.65%)
SP 500 3537.15 -35.65 (-1.00%)
10-yr Note +10/32 0.879
NYSE Adv 741 Dec 2251 Vol 1.0 bln
Nasdaq Adv 1105 Dec 2324 Vol 3.8 bln

Industry Watch
Strong: Consumer Staples, Communication Services
Weak: Energy, Financials, Utilities, Industrials, Materials

Moving the Market

-- Nasdaq is the relative outperformer amid gains in mega-cap/stay-at-home/growth stocks

-- Cyclical stocks continue to succumb to profit taking

-- Renewed stimulus hurdles

-- Another record day for coronavirus cases/hospitalizations in U.S.

WTI crude futures settle slightly lower
12-Nov-20 15:25 ET
Dow -402.91 at 28994.66, Nasdaq -90.48 at 11695.87, S&P -44.57 at 3528.23

[BRIEFING.COM] The S&P 500 continues to trade lower by 1.2% but remains higher by 0.6% for the week.

One last look at the S&P 500 sectors shows red across the board. The energy (-3.5%), materials (-2.5%), financials (-2.1%), and utilities (-2.1%) sectors are down more than 2.0%, while the consumer staples sector is down the least with a 0.5% decline.

WTI crude futures settled lower by 0.8%, or $0.32, to $41.49/bbl.