Market update: S&P 500 dips below 3,800 Dow dips below 33,000 (28 Dec 22)

 S&P 500 dips below 3,800

Dow dips below 33,000

Nasdaq dips below 10,300 

 

 (live)

 

($INDU live,  $COMPQ live)

The Dow and the S&P 500 trading below the “death cross”

Both the Dow and the S&P 500 are trading below their respective “death cross” (50 dma crossed below 200 dma).

Market update (31 January 20)

The stock market sold off to end the week, and month, on growing concerns about the coronavirus and the negative effect it could have on economic growth.  

The coronavirus angst was exacerbated by increasing reports of worldwide cases; Delta Air Lines (DAL), United Airlines (UAL), and American Airlines (AAL) suspending U.S.-China flights; and the White House declaring a public health emergency in addition to announcing some travel restrictions. 

 

Fri, Jan 31, 20

Worried by the mounting death toll from the coronavirus and drastic efforts to contain it, investors dashed for the exits,

coronavirus-related stocks on Fri Jan 31, 20

S&P 500, 14 months

YTD

Nasdaq Composite +2.0% 

S&P 500 -0.2%  

Dow Jones Industrial Average -1.0%  

Russell 2000 -3.3%  

GSG commodity index, renko chart

 

The Economist cover; sold out masks at CVS

Latest coronavirus news:  

- Chinese authorities have reported more than 350 fatalities

- China has banned burials or funerals for virus victims

- There are over 14,000 confirmed cases worldwide

- Hong Kong, Japan, Singapore, UAE and the US have confirmed more infections

- The outbreak has reached more than two dozen countries and regions globally

- Several countries are halting flights to and from China

- WHO declared the virus was a public health emergency of international concern

Market update (29 Nov 2019)

Nasdaq Composite +30.6% YTD
S&P 500 +25.3% YTD
Russell 2000 +20.5% YTD
Dow Jones Industrial Average +20.3% YTD

S&P 500 - 2 years

Market update: Federal Reserve cuts interest rates by 0.25% for the third time this year (30 Oct 2019)

3rd rate cut this year:  The Federal Reserve did exactly what was expected Wednesday by lowering its key policy interest rate one-quarter percentage point, to a range of 1.50%-1.75% and implying in the directive that it is unlikely to cut the fed funds rate again in December.
Fed Chair Powell, at his press conference, provided some dovish fodder with the suggestion that the Fed will need to see a significant move higher in inflation to raise interest rates to address such a development.

• Nasdaq Composite +24.7% YTD
• S&P 500 +21.1% YTD
• Russell 2000 +17.0% YTD
• Dow Jones Industrial Average +16.1% YTD

 

Market outlook : S&P 500 at major resistance level (20 Sept 2019)

• The all-time high close on the S&P 500 is 3025.86, set on July 26, 2019. 
• On Thursday, the S&P 500 hit 3021.99, less than 4 points from that key level.

Market update: Federal Reserve cuts interest rates by 0.25% for the second time this year (18 September 2019)

FOMC Decision: Fed cuts its benchmark overnight lending rate 25 bps to 1.75-2.00% as widely expected

There was a 7-3 vote to cut the target range for the fed funds rate by 25 bps to 1.75-2.00%. Boston Fed President Rosengren and Kansas City Fed President George dissented on the belief the target range should be left unchanged at 2.00-2.25%. St. Louis Fed President Bullard dissented on the belief the target range should be cut by 50 basis points.

• Nasdaq Composite +23.2% YTD
• S&P 500 +19.9% YTD
• Dow Jones Industrial Average +16.4% YTD
• Russell 2000 +16.3% YTD

The FOMC voted 7-3 to cut the target range for the fed funds rate by 25 basis points to 1.75-2.00%, as expected. Price action leading up to the decision was muted and volatility quickly ensued after the policy directive. Buying conviction, however, was largely absent before and immediately after the decision as the market extended losses heading into Fed Chair Powell's press conference.

Key takeaways from the Fed's policy decision included:

(1) Voting members remained divided: St. Louis Fed President Bullard preferred a 50-basis points cut, while Boston Fed President Rosengren and Kansas City Fed President George preferred no change in the fed funds rate; (2) the median Fed member is suggesting there will be no more rate cuts in 2019 and 2020; and (3) the interest paid on excess reserve balances was lowered to 1.80% from 2.10% -- which could provide some stability in the repo market after the New York Fed injected more liquidity today.  

Selling pressure soon abated and stocks climbed to session highs, with the S&P 500 financials sector (+0.4%) providing influential leadership, as the Fed Chair Powell wrapped up his press conference. The utilities sector (+0.5%) outperformed, while the energy sector (-0.4%) underperformed as oil prices ($58.07/bbl, -1.30, -2.2%) continued to pull back. 

Mr. Powell said the Fed does not see a recession, is not interested in negative rates, and the repo issue has no implications for the economy or monetary policy. FedEx (FDX), meanwhile, provided a pessimistic view on the global economy. The company cut its FY20 EPS guidance due to a weakening global environment, driven by trade tensions and policy uncertainty.


President Donald Trump, who has been bashing the Fed on Twitter and demanding a larger cut, was predictably fast on his fingers.

President Trump, who has called Fed policymakers “boneheads” for not cutting rates enough, tore into Wednesday’s decision, saying Chairman Jay Powell and his colleagues have “no ‘guts.’” Trump says the Fed is risking U.S. competitiveness by keeping rates substantially higher than most of the rest of the developed world.

But Powell said he does not believe the Fed will ever resort to negative rates, instead relying on asset purchases and forward guidance, as it did following the 2008 financial crisis. For now, though, Powell foresees continued moderate growth for the U.S. economy.

Market update: Trade slams stocks as Fed takes wait-and-see stance (23 August 2019)

Nasdaq Composite +16.8% YTD
S&P 500 +13.6% YTD
Dow Jones Industrial Average +9.9% YTD
Russell 2000 +8.2% YTD

The stock market sold off on Friday after President Trump ordered companies to find an alternative to China in response to Beijing announcing retaliatory tariffs against the U.S. The S&P 500 (-2.6%), Dow Jones Industrial Average (-2.4%) , the Nasdaq Composite (-3.0%) and Russell 2000 (-3.1%).

Worries about trade tensions with China following a combative tweet earlier in the day from President Trump, who was squawking back at China for its tariff announcement this morning and "ordering" U.S. companies to find alternatives to China, have catalyzed today's sell-off.

The day started with investors looking forward to Fed Chair Powell's speech from Jackson Hole, Wyoming. Attention quickly shifted to trade, however, after China announced tariffs on $75 billion of goods imported from the U.S on Sept. 1 and Dec. 15, which are the same dates the U.S. has planned for its tariffs on China. The tariff rate will range from 5-10%, including a separate 5-25% on autos and auto parts starting Dec. 15.

Modest selling ensued, but stocks quickly recouped losses after Mr. Powell reiterated comments that upheld the market's view for further economic stimulus. The day had barely begun, though, and President Trump took to Twitter to lash out against both the Fed Chair and China. Stocks fell noticeably on the president's declaration that companies find alternatives to China.

Amid the uncertainty and growth concerns, investors flocked to safe-haven assets like gold ($1537.25/oz, +$28.75, +1.9%), the Japanese yen, and U.S. Treasuries. In addition, expectations for further downside in equities contributed to a 17.8% spike in the CBOE Volatility Index (19.65, +2.97).

The 2-yr yield dropped seven basis points to 1.53%, and the 10-yr yield dropped eight basis points to 1.53%. The U.S. Dollar Index fell 0.5% to 97.73. WTI crude fell 2.0%, or $1.12, to $54.16/bbl.

President Trump also indicated he would officially respond to Beijing's actions in the afternoon. No response was announced by session's close, which may have contributed to some reservations to step into the action during the day.

U.S. Treasuries ended the week on a sharply higher note.
Yield Check:

• 2-yr: -7 bps to 1.53%
• 3-yr: -8 bps to 1.45%
• 5-yr: -8 bps to 1.41%
• 10-yr: -8 bps to 1.53%
• 30-yr: -8 bps to 2.03%

Commodities:

• WTI crude: -2.0% to $54.16/bbl
• Gold: +1.9% to $1537.50/ozt
• Copper: -1.2% to $2.53/lb

Currencies:

• EUR/USD: +0.6% to 1.1146
• GBP/USD: +0.3% to 1.2288
• USD/CNH: +0.6% to 7.1337
• USD/JPY: -1.0% to 105.31

Market update: FOMC announcement of no rate hike (20 March 2019)

The Federal Reserve says it will leave interest rates unchanged until it sees whether the economy stabilizes as the stimulative effect of 2017 tax cuts fades, and has downgraded its forecast of US economic growth slightly from 2.3% to 2.1%. Chairman Jerome Powell says the central bank expects the modest economic slowdown "with overall conditions remaining favorable."

• Fed leaves rates unchanged at 2.25-2.50%, as widely expected; Signals no rate hike this year.
• Leaving the fed funds rate intact was widely expected. Projecting zero rate hikes in 2019 -- and only one in 2020 -- along with providing an end date for its balance sheet runoff was less expected. These actions made it clear that the market doesn't have to fear the Fed like it did in the fourth quarter.
• A dovish Fed reignited slowdown worries

Fed Chair Jerome Powell says economy is in a good position and it will use monetary policy to keep it there

• Fed will remain patient on monetary policy.
• Conditions are less supportive of growth than in 2018.
• Notes weakness in Europe and China.
• Limited data for this year has been mixed; Notes Feb jobs number.
• Business fixed investment growing slower y/y;
• Inflation has been muted; 
• Brexit and trade negotiations pose risk to the outlook.

Closing Commodities: WTI oil prices settles above $60/barrel, near its HoD

• Metals Settlement Prices:
  • Apr gold settled today's session $5.60 lower (-0.4%) at $1301.25/oz
  • May silver settled today's session $0.05 lower (-0.3%) at $15.32/oz
  • May copper settled $0.01 lower (-0.3%) at $2.92/lb
• Agriculture Settlement Prices:
  • May corn settled unchanged at $3.71/bushel
  • May wheat settled $0.08 higher (+1.8%) at $4.64/bushel
  • May soybeans settled $0.01 higher at $9.05/bushel
• Energy Settlement Prices:
  • Apr crude oil futures rose $0.86 (+1.4%) to $60.20/barrel
  • Apr natural gas settled $0.05 lower (-1.7%) at $2.82/MMBtu
  • Apr RBOB gasoline settled $0.02 higher (+1.1%) at $1.91/gallon
  • Apr heating oil futures settled $0.02 higher (+1.0%) at $2.01/gallon

Market update: key market catalysts (19 March 2019)

SPY daily and monthly

$SPX last 5 sessions

1.  Bank of America/Merrill Lynch fund manager survey

• Latest survey showed allocation to equities is at its lowest since September 2016.  Implies many fund managers have missed/trailed the 2019 rally effort and will need to play catch up, providing more fuel to keep the rally going.

2.  Green shoots of economic optimism

• Economic sentiment in Germany was better than expected in March and employment trends in the UK were also better than expected, highlighted by the lowest unemployment rate (3.9%) since 1975, according to Reuters.
• The reassuring data helped stoke the narrative that the global economy may be bottoming (or has bottomed), which has driven buying interest in cyclical sectors.

3.  Ongoing leadership from the semiconductor stocks

• This industry group is regarded as having leading indicator status, so it resonates as a positive marker that the Philadelphia Semiconductor Index is up 21.9% year-to-date, including today's 1.4% gain.
• Strength in the semis has been a key source of support for the information technology sector (+0.3%), which is the market's most heavily-weighted sector.

4.  Frontrunning the Fed

• The stock market knows the Fed is on its side at the moment.  On Wednesday, it expects the FOMC to reinforce that position by holding the fed funds rate steady and reiterating a patient mindset. 
• This expectation, and the speculation that the dot plot will show a reduced rate-hike projection for 2019 (the median estimate in December called for two rate hikes), and that the Fed could announce a plan regarding the timing for ending its balance sheet runoff, have helped keep selling interest in check.

President Trump hosts Brazil’s new leader

Today, President Trump welcomed the recently elected President of Brazil, Jair Bolsonaro, to the White House.

President Bolsonaro’s election marked a historic opportunity for the United States and Brazil—the two largest democracies in the Western Hemisphere—to build a new partnership focused on increased prosperity, strong security, and national sovereignty.

Perhaps most important, Brazil is a crucial ally in President Trump’s stand against the corrupt, socialist Maduro dictatorship in Venezuela. President Bolsonaro reiterated that Brazil stands with Venezuelan Interim President Juan Guaido, as well as with the democratically elected National Assembly and the Venezuelan people in their fight against tyranny.

“The twilight hour of socialism has arrived in our hemisphere,” President Trump said from the Rose Garden this afternoon. “And hopefully, by the way, it’s also arrived—that twilight hour—in our great country.”

“I have always admired the United States of America,” President Bolsonaro added. “And this sense of admiration has just increased after you took office.”

President Trump said he will designate Brazil as a major non-NATO ally during the visit of Brazil's President Jair Bolsonaro to the White House. Argentina is the only other South American country with that designation.


President Jair Bolsonaro, left, presents Donald Trump with a Brazil national football jersey after the US leader gave him a US soccer team shirt

Market update: Stocks tumble following technical breach (10 October 2018)

Stocks tumbled on Wednesday as bond yields held steady at multi-year highs and amid continued concerns about economic and earnings growth prospects. The S&P 500 lost 3.3%, extending its losing streak to five sessions in a row, which is its longest losing streak since 2016. The Dow Jones Industrial Average and the Nasdaq Composite also fell sharply, losing 3.2% and 4.1%, respectively.

At the opening bell, the S&P 500 fell below its 50-day moving average (2879), which has been an area of support for the market this week. Selling continued from there, with the S&P 500 extending its opening loss of 0.5% more than six times over. However, the selling didn't feel fast and panicky; rather, it was somewhat orderly in nature, which underscores the idea that it was largely a risk-reduction effort, whereby market participants are cutting their exposure to stocks, cognizant that earnings growth estimates are at risk with rising interest rates, tariff actions, and higher costs.

Other key technical breaches included the Dow falling below its 50-day moving average, the Nasdaq falling below its 200-day moving average, and the Russell 2000 falling below its 200-day moving average.

High-growth FANG names, which have been key leadership stocks for this bull market, struggled mightily on Wednesday; Netflix (NFLX 325.89, -29.82) lost 8.4%, Amazon (AMZN 1755.25, -115.07) lost 6.2%, Facebook (FB 151.38, -6.52) lost 4.1%, Apple (AAPL 216.36, -10.51) lost 4.6%, and Alphabet (GOOG 1081.22, -57.60) lost 5.1%.

Information technology was the worst-performing S&P sector on Wednesday, tumbling 4.8%, but growth-sensitive, cyclical groups underperformed on the whole, with financials, consumer discretionary, industrials, energy, and communications services all losing between 3.0% and 3.9% apiece. None of the 11 S&P sectors were able to advance on Wednesday, but the defensive-oriented utilities (-0.5%) group did manage to keep its loss in check.

Interestingly, the equity sell off did not lead to higher demand for "risk-free" U.S. Treasuries. In fact, bonds declined with stocks on Wednesday, with investors presumably opting to go to cash instead. The benchmark 10-yr yield, which moves inversely to the price of the 10-yr Treasury note, advanced two basis points to 3.23%, closing near a seven-year high.

Meanwhile, the CBOE Volatility Index, often referred to as the "investor fear gauge", spiked 36.2% to 21.73, its highest level since late March.

Rotation
Some market participants argue that investors are shifting from growth-fueled strategies to value shares, which have been out of favor as shares of growthy, techy companies have soared. Investors tend to turn to overlooked value companies in the later stages of an economic cycle, before a recession, market participants say.

Thursday, Oct 11, 18: Wall Street extends Wednesday's drop

Wall Street extended Wednesday's tumble on Thursday in a volatile day of trading. The major averages settled notably lower, with the S&P 500 losing 2.1%, the Dow Jones Industrial Average falling 2.1%, and the Nasdaq Composite shedding 1.3%. With Thursday marking its sixth straight decline, the S&P 500 is now down 5.5% for the week and is 6.9% below its September 20 record close.

Financial giants JPMorgan Chase (JPM 108.13, -3.34), Citigroup (C 68.38, -1.57), and Wells Fargo (WFC 51.44, -0.99) will unoffically kick off the third quarter earnings season on Friday morning.

Also of note, the CBOE Volatility Index (VIX) spiked once again on Thursday, jumping 11.8% to 25.57, marking its highest level since February.

From a technical standpoint, the S&P 500 got into trouble once again on Thursday, closing below its 200-day moving average (2766) for the first time since March, after breaching its 50-day moving average the day before. The Dow Jones Industrial Average also fell below its 200-day moving average (25140) and the Nasdaq Composite and Russell 2000 stayed below theirs.

US markets close

• 2018-10-12 Friday:  European and US markets 

Market update: Federal Reserve hikes short-term rates by 0.25% (26 September 2018)

The Federal Reserve increased short-term interest rates on Wednesday, as expected, raising the fed funds target range by 25 basis points to 2.00-2.25%.

• Fed hikes interest rates, raises its economic outlook and drops 'accommodative' language
• Fed's Powell: Lack of 'accomodative' language a sign policy inline with expectations

Stocks were up modestly ahead of the release of the Fed's decision, which crossed the wires at 2:00 PM ET, and extended gains after the central bank removed the word 'accommodative' from its policy statement. However, that initial move was reversed, and then some, following a post-decision press conference from Fed Chairman Jerome Powell, during which he said the language change didn't signal a change in the Fed's path for rate hikes.

The S&P 500 was up as much as 0.5% on Wednesday but fell sharply in the final minutes of the session to finish with a loss of 0.3%. The tech-heavy Nasdaq Composite ended lower by 0.2%, the blue-chip Dow Jones Industrial Average finished lower by 0.4%, and the small-cap Russell 2000 lost 1.0%.

As for rate-hike projections, the Fed still appears to be on track to raise rates another 25 basis points in December, with the CME FedWatch Tool putting the chances at 79.2%. Beyond 2018, the Fed's dot plot showed expectations for three rate hikes in 2019 (unchanged from June) and one in 2020 (also unchanged from June).

U.S. Treasury yields fell following the Fed's policy announcement, although the 2-yr yield managed to close unchanged at 2.83%. The yield on the benchmark 10-yr Treasury note dropped four basis points to 3.06%. In currencies, the U.S. Dollar Index finished +0.2% at 93.90, but was volatile after the release.

The drop in Treasury yields weighed on the rate-sensitive financial sector, which finished at the bottom of the sector standings with a loss of 1.3%. The energy sector (-1.0%) was another notable laggard, dropping in tandem with the price of crude oil; WTI crude futures finished -1.0% at $71.58/bbl.