Closing Stock Market Summary
The major indices all closed near session lows. Negative price action had the S&P 500 (-0.5%) test the 4,100 level, hitting 4,103 at its low. Today's close marks a 10.3% decline in the S&P 500 from the July 31 high (i.e. a technical correction). Meanwhile, a big gain in Amazon.com (AMZN 127.74, +8.17, +6.8%) following better-than-expected earnings and guidance helped support the Nasdaq Composite, which closed with a 0.4% gain.
Other mega caps outperformed alongside Amazon, as evidenced by a 0.5% gain in the Vanguard Mega Cap Growth ETF (MGK). Semiconductor stocks were another pocket of strength after Intel (INTC 35.54, +3.02, +9.3%) beat earnings estimates. The PHLX Semiconductor Index climbed 1.2%.
Just about everything else aside from mega caps and semiconductor stocks declined today. Eight of the 11 S&P 500 sectors decline with six of them registering losses larger than 1.0%. The energy sector (-2.3%) was the worst performer by a wide margin thanks to losses in Chevron (CVX 144.35, -10.40, -6.7%) and Exxon Mobil (XOM 105.55, -2.05, -1.9%) after they reported earnings.
The financials sector (-1.9%) was the next worst performer, weighed down by a loss in JPMorgan Chase (JPM 135.69, -5.07, -3.6%) after CEO Jamie Dimon confirmed that he and his family plan to sell a portion of their holdings.
The only sectors to close in the green -- consumer discretionary (+1.7%), information technology (+0.6%), and communication services (+0.1%) -- house the outperforming mega cap stocks.
The negative bias was partially driven by geopolitical angst after reports that the US carried out airstrikes against Iranian backed targets in Syria, and separate reports that Israel is expanding ground operations in Gaza.
Participants learned about those developments ahead of the weekend when market's are closed for trading and investors can't react in real-time.
Market participants were also reacting to this morning's release of the September Personal Income and Spending report, which featured inflation numbers that are not likely to persuade the Fed to cut rates anytime soon.
The 2-yr note yield fell two basis points to 5.03% and the 10-yr note yield settled unchanged at 4.85%.
- Nasdaq Composite: +20.8% YTD
- S&P 500: +7.4% YTD
- Dow Jones Industrial Average: -2.2% YTD
- S&P Midcap 400: -4.3% YTD
- Russell 2000: -7.1% YTD
Reviewing today's economic data:
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September Personal Income 0.3% vs consensus of 0.4%; Prior 0.4%; September Personal Spending 0.7% ( consensus 0.5%); Prior 0.4%; September PCE Prices 0.4% ( consensus 0.3%); Prior 0.4%; September PCE Prices - Core 0.3% (consensus 0.3%); Prior 0.1%
- The key takeaway from the report is that the PCE Price Index and the core PCE Price Index had a sticky feel to them, meaning they lacked a stronger trend of disinflation. That is apt to keep the Fed in a more hawkish mindset, which doesn't mean the Fed will be moved to raise rates soon. What it does mean is that the Fed won't be thinking about a rate cut anytime soon.
- October Univ. of Michigan Consumer Sentiment - Final 63.8 (consensus 63.1); Prior 63.0
- The key takeaway from the report is that the decline relative to the final September reading was owed to weakening sentiment among higher-income consumers and those with sizable stock holdings. Furthermore, expected business conditions weakened among all consumers and year-ahead inflation expectations jumped back to a level last seen in May.
There is no U.S. economic data of note of Monday.