Closing Stock Market Summary
The stock market registered sizable declines on this quarterly options and futures expiration day. The S&P 500, Nasdaq, and Russell 2000 gave back all their gains for the week while the Dow Jones Industrial Average narrowed its weekly gain to a modest 0.2%. The major indices all closed near their worst levels of the session, which had the S&P 500 and Nasdaq below their 50-day moving averages.
Many stocks participated in downside moves, but mega caps and growth stocks had an outsized influence on index performance. The Russell 3000 Growth Index fell 1.6%. The Vanguard Mega Cap Growth ETF (MGK) fell 1.7% versus a 1.2% decline in the S&P 500. Meanwhile, the Invesco S&P 500 Equal Weight ETF (RSP) closed down 0.8%.
Weak semiconductor stocks also weighed heavily on index performance. That weakness followed Arm's (ARM 60.75, -2.84, -4.5%) successful IPO yesterday and a Reuters report that Taiwan Semiconductor Manufacturing Co. (TSM 89.25, -2.22, -2.4%) is delaying chip equipment shipments. The PHLX Semiconductor Index fell 3.0%.
Rising market rates and oil prices ($91.00/bbl, +0.74, +0.8%) contributed to the negative bias. The 2-yr note yield rose three basis points today, and seven basis points this week, to 5.04%. The 10-yr note yield rose four basis points today, and seven basis points this week, to 4.33%.
All 11 S&P 500 sectors closed in the red. The utilities sector (-0.5%) led the relative outperformers while the information technology sector (-2.0%) saw the steepest decline. The latter was weighed down by weak mega cap and semiconductor components, along with a big loss in Adobe (ADBE 528.89, -23.27, -4.2%), which underwhelmed with its fiscal Q4 guidance.
Notably, General Motors (GM 33.95, +0.29, +0.9%) and Stellantis (STLA 19.25, +0.41, +2.2%) registered gains despite failing to reach a deal with the UAW, which resulted in targeted strikes at three manufacturing plants (one for each of the automakers). Ford (F 12.61, -0.01, -0.1%) for its part logged a small decline.
Nasdaq Composite: +31.0% YTD
S&P 500: +15.9% YTD
S&P Midcap 400: +5.6% YTD
Russell 2000: +4.9% YTD
Dow Jones Industrial Average: +4.4% YTD
Reviewing today's economic data:
August Import Prices 0.5%; Prior was revised to 0.1% from 0.4%
August Import Prices ex-oil -0.1%; Prior was revised to -0.1% from 0.0%
August Export Prices 1.3%; Prior was revised to 0.5% from 0.7%
August Export Prices ex-ag. 1.7%; Prior 0.6%
September Empire State Manufacturing 1.9 ( consensus -10.0); Prior -19.0
August Industrial Production 0.4% (consensus 0.2%); Prior was revised to 0.7% from 1.0%; August Capacity Utilization 79.7% (consensus 79.3%); Prior was revised to 79.5% from 79.3%
The key takeaway from the report is that motor vehicle assemblies were weak in front of what is now a UAW strike, so the outlook for industrial production in September will be constrained by an expected disruption to auto manufacturing capabilities as a result of the strike.
September Univ. of Michigan Consumer Sentiment - Prelim 67.7 (consensus 69.4); Prior 69.5
The key takeaway from the report is that consumers' inflation expectations came down. That is something the Fed will like to see, but one is left to wonder if those expectations will remain in check if gas prices continue to increase.
Looking ahead, Monday's calendar features the release of the September NAHB Housing Market Index (prior 50) at 10:00 a.m. ET and July Net Long-Term TIC Flows (prior $195.9 billion) at 4:00 p.m. ET.