Closing Stock Market Summary
The major indices closed with sizable losses on the heels of NVIDIA's (NVDA 471.74, +0.58, +0.1%) blowout earnings report that was replete with much better than expected Q3 guidance and a new $25 billion share buyback plan. Things looked different at the open, though, with many stocks building on yesterday's gains.
Mega cap stocks rolled over quickly, however, and never regained their opening momentum, which weighed heavily on the broader market. Ultimately, the major indices closed near their lows of the day, which left the S&P 500 below 4,400.
The disappointing price action after NVIDIA's report likely caught many participants by surprise and became its own downside catalyst, which invited increased selling interest. The Vanguard Mega Cap Growth ETF (MGK), which had been up as much as 0.9% at its high, registered a 2.0% loss today. The Invesco S&P 500 Equal Weight ETF (RSP), which had been up as much as 0.6% earlier, closed with a 1.0% loss.
Weak semiconductor stocks were another overhang for the broader market, falling prone to a sell-the-news reaction. The PHLX Semiconductor Index sank 3.4%. Even NVDA, which had been up as much 6.6% today, closed near its low of the day with a measly 0.1% gain.
Other notable laggards included Dow component Boeing (BA 217.31, -11.27, -4.9%), which said a new flaw found in the 737 MAX will slow deliveries in the near term, T-Mobile (TMUS 133.32, -3.01, -2.2%), which said it is going to cut approximately 7% of its staff, and Dollar Tree Stores (DLTR 123.88, -18.34, -12.9%), which disappointed with its Q3 outlook.
All 11 S&P 500 sectors closed in the red with losses ranging from 0.2% (financials) to 2.2% (information technology).
Treasury yields settled slightly higher, keeping pressure on stocks, following another encouraging initial jobless claims report and ahead of Fed Chair Powell's speech at the Jackson Hole Symposium on Friday about the economic outlook. The 2-yr note yield rose eight basis points to 5.01% and the 10-yr note yield rose four basis points to 4.24%.
- Nasdaq Composite: +28.6% YTD
- S&P 500: +14.0% YTD
- S&P Midcap 400: +5.8% YTD
- Russell 2000: +4.8% YTD
- Dow Jones Industrial Average: +2.9% YTD
Reviewing today's economic data:
- Initial jobless claims decreased by 10,000 to 230,000 (Briefing.com consensus 240,000) for the week ending August 19 while continuing jobless claims decreased by 9,000 to 1.702 million for the week ending August 12.
- The key takeaway from the report is that the leading indicator of initial claims is still leading the market to believe that the labor market remains tight, which is something that won't escape the Fed's eye.
- Durable goods orders declined 5.2% month-over-month in July (consensus -4.0%). Excluding transportation, durable goods orders increased 0.5% month-over-month ( consensus 0.2%).
- The key takeaway from the report, other than July's weakness was driven predominately by transportation, was that business spending transpired at a tepid pace, evidenced by the 0.1% increase in new orders for nondefense capital goods excluding aircraft.
- Weekly EIA Natural Gas Inventories showed a build of 18 bcf versus a build of 35 bcf last week.
Friday's economic calendar features:
- 10:00 ET: Final August University of Michigan Consumer Sentiment ( consensus 71.2; prior 71.2)
- 10:05 ET: Fed Chairman Powell's Speech at the Jackson Hole Symposium