The S&P 500 is down 1.1% and has traded mostly lower today amid noticeable weakness in the top-weighted information technology sector (-2.1%). The Nasdaq Composite is down 1.7%, while the Dow Jones Industrial Average (-0.6%) and Russell 2000 (-0.8%) outperform on a relative basis.
Losses are broad within the tech sector, but the biggest drags are Apple (AAPL 106.74, -3.62, -3.3%) and Microsoft (MSFT 198.04, -4.83, -2.4%) as they continue to fall from early highs this week. Valuation concerns and options-expiration activity are some negative factors, but the most discussed headwind is the U.S. decision to prohibit users from downloading TikTok and WeChat, starting Sunday.
Many view the download ban as another negotiating tactic to get a better deal for the U.S., but the follow-through risk and potential for Chinese retaliation on U.S. tech companies has weighed on sentiment. The Philadelphia Semiconductor Index is down 2.1%.
Interestingly, investors aren't fleeing the market, as the financials (+0.3%) and health care (+0.3%) sectors are still clinging onto small gains. Still, the recent selling in the market has taken the S&P 500 back below its 50-day moving average (3343) after finding support at the key technical level yesterday.
Adding to the generally negative mood today is Oppenheimer downgrading Home Depot (HD 275.41, -4.54, -1.6%) and Lowe's (LOW 160.75, -3.03, -1.9%) to Perform from Outperform. Conversely, Tesla (TSLA 435.01, +11.61, +2.7%) had its price target raised to $515 from $480 at Piper Sandler.
U.S. Treasuries are trading little changed and are not moving higher as some would expect when the market is under selling pressure. The 10-yr yield is up one basis point to 0.69%.
Reviewing today's economic data:
The final University of Michigan Index of Consumer Sentiment for August ticked up to 74.1 (Briefing.com consensus 72.8) from the preliminary reading of 72.8. The final reading for July was 72.5.
The key takeaway from the report is that consumer sentiment has been slow to rebound and that the incremental improvement seen has been based simply on the view that things couldn't get worse than they were at the depths of the shutdown period.
The Conference Board's Leading Economic Index (LEI) increased 1.2% in August (Briefing.com consensus 1.4%) following an upwardly revised 2.0% increase (from 1.4%) in July. The increase for August represents the fourth straight month the index has been positive after declining 7.4% in March and 6.3% in April.
The key takeaway from the report is the understanding that, despite four straight increases, more repair work is necessary. At 106.5, the index is still 4.7% below the level seen in February.
The current account deficit for the second quarter totaled $170.5 billion (Briefing.com consensus -$146.3 billion). The first quarter deficit was revised to $111.5 billion from $104.2 billion.
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