Closing Stock Market Summary
The major indices all fell more than 1.0% today, erasing yesterday's modest rebound right out of the gate. The negative bias was due in part to ongoing worries about higher interest rates.
The 10-yr note yield climbed another two basis points today to 4.56%, after hitting 4.48% at this morning's low, despite some weaker than expected new home sales and consumer confidence data released this morning. The 2-yr note yield rose two basis points to 5.12%.
Concerns about higher rates were stoked by JPMorgan Chase CEO, Jamie Dimon, who told the Times of India that he is not sure the world is prepared for 7%, and Minneapolis Fed President Kashkari (FOMC voter), who said, according to Bloomberg, that he thinks another rate hike before year end would likely be needed if the economy is stronger than expected.
Seasonality was cited as another potential factor contributing to the negative price action. September, historically, has been the worst month of the year for the S&P 500. With today's losses, the S&P 500, Nasdaq Composite, and Russell 2000 are now down 5.2%, 6.9%, and 7.2%, respectively, this month.
Mega caps and semiconductor stocks paced broad based losses, but it was the rate-sensitive utilities sector (-3.1%) that saw the biggest decline today. The Vanguard Mega Cap Growth ETF (MGK) fell 1.7% and the PHLX Semiconductor Index fell 1.8%. The market-cap weighted S&P 500, which fell 1.5%, closed below 4,300 for the first time since early June and near its worst level of the day.
Decliners had a nearly 6-to-1 lead over advancers at the NYSE and a greater than 2-to-1 lead at the Nasdaq. Volume picked up from yesterday, but remained below average at the NYSE and Nasdaq.
All 11 S&P 500 sectors closed in the red. The energy sector (-0.5%) saw the smallest decline as oil prices climbed ($90.49/bbl, +0.87, +1.0%). The consumer discretionary sector (-2.0%) was another laggard of note along with the information technology (-1.8%) and real estate (-1.8%) sectors.
Separately, Amazon.com (AMZN 125.98, -5.29, -4.0%) was an individual standout of note to the downside following news that the FTC and 17 state attorneys general are suing the company for illegally maintaining monopoly power.
- Nasdaq Composite: +24.8% YTD
- S&P 500: +11.3% YTD
- S&P Midcap 400: +1.7% YTD
- Dow Jones Industrial Average: +1.4% YTD
- Russell 2000: UNCH YTD
Reviewing today's economic data:
- July FHFA Housing Price Index 0.8%; Prior was revised to 0.4% from 0.3%
- July S&P Case-Shiller Home Price Index 0.1% ( consensus 0.5%); Prior -1.2%
- September Consumer Confidence 103.0 (consensus 105.0); Prior was revised to 108.7 from 106.1
- The key takeaway from the report is that the drop in consumer confidence was driven by consumers' weakening expectations for future business conditions, job availability, and incomes, all of which has the potential to translate into softer spending activity.
- August New Home Sales 675K (consensus 695K); Prior was revised to 739K from 714K
- The key takeaway from the report is that new home sales activity, which is measured on signed contracts, is being adversely impacted by high mortgage rates that have hurt affordability. New home sales in August were the lowest since March.
Looking ahead to Wednesday, participants will receive the following economic data:
- 7:00 ET: Weekly MBA Mortgage Index (prior 5.4%)
- 8:30 ET: August Durable Orders ( consensus -0.2%; prior -5.2%) and Durable Orders ex-transportation consensus 0.3%; prior 0.5%)
- 10:30 ET: Weekly crude oil inventories (prior -2.14 mln)