Closing Stock Market Summary
Today's trade featured a fairly broad retreat. The major indices all fell at least 1.0% and the A-D line favored decliners by a 5-to-1 lead at the NYSE and a greater than 3-to-1 lead at the Nasdaq.
Rising Treasury yields were a big overhang for the market as the 10-yr note hit a new cycle high yield. Rates took a quick dip around midday in response to a solid $13 billion 20-yr bond reopening, but selling picked back up and Treasuries settled near their intraday high yields. The 2-yr note yield rose two basis points to 5.22% and the 10-yr note yield climbed another six basis points to 4.90%.
The negative bias in stock market was also a function of geopolitical uncertainty after a summit between President Biden, who is in Israel now, and regional leaders in the Middle East was cancelled following Tuesday's bombing of a Gaza hospital that killed hundreds of people.
Many stocks participated in the sell off. Nine of the 11 S&P 500 sectors registered a decline with four of them falling more than 2.0%. The energy (+0.9%) and consumer staples (+0.4%) sectors were alone in positive territory at the close.
The industrials sector (-2.4%) was a top laggard, thanks in part to a sizable loss in United Airlines (UAL 36.24, -3.88, -9.7%), which issued a Q4 profit warning tied to higher costs and the uncertainty related to the Israel-Hamas war. J.B. Hunt Transport (JBHT 178.67, -17.34, -8.9%) was another notable loser from the sector after missing on earnings estimates, saying it still sees a freight recession.
Morgan Stanley (MS 74.88, -5.45, -6.8%) was another standout loser after reporting quarterly results which contained some relatively disappointing results for its wealth management division. That weakness weighed on the financials sector, which dropped 1.7%.
Dow components Travelers (TRV 168.11, -1.25, -0.7%) and Procter & Gamble (PG 150.03, +3.77, +2.6%), meanwhile, received mixed reactions after reporting earnings.
Separately, it was reported that Rep. Jim Jordan (R-OH) lost a second vote to become Speaker of the House.
- Nasdaq Composite: +27.2% YTD
- S&P 500: +12.4% YTD
- Dow Jones Industrial Average: +1.6% YTD
- S&P Midcap 400: +1.1% YTD
- Russell 2000: -1.8% YTD
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index -6.9%
- September Housing Starts 1.358 mln (consensus 1.380 mln); Prior was revised to 1.269 mln from 1.283 mln; September Building Permits 1.473 mln (Briefing.com consensus 1.448 mln); Prior was revised to 1.541 mln from 1.543 mln
- The key takeaway from the report is that the weakness was concentrated in permits for multi-unit dwellings. Single-unit starts were up 3.2% and single-unit permits rose 1.8%, which is welcome for a supply-challenged housing market.
Thursday's economic calendar features:
- 8:30 ET: Weekly Initial Claims (consensus 211,000; prior 209,000), Continuing Claims (prior 1.702 mln), and October Philadelphia Fed survey (consensus -6.5; prior -13.5)
- 10:00 ET: September Existing Home Sales ( consensus 3.90 mln; prior 4.04 mln) and September Leading Indicators (consensus -0.4%; prior -0.4%)
- 10:30 ET: Weekly natural gas inventories (prior +84 bcf)