Closing Stock Market SummaryIt shaped up to be a rough session for the stock market, but it wasn't always that way. The market clung to a narrow trading range and modest losses until the FOMC policy decision at 2:00 p.m. ET, when stocks took a sharp turn higher. Things quickly deteriorated, however, as Fed Chair Powell gave his press conference at 2:30 p.m. ET. Ultimately, the major averages closed at session lows.
The initial push higher after the policy decision was based on the following line in the directive, which fueled the market's hope of a less aggressive rate-hike approach at future meetings:
"In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."
The wind got knocked out of the market's sails, however, after Mr. Powell emphasized that the Fed still has a ways to go to get the policy rate to a restrictive level and added "it is very premature to be thinking about pausing."
Another rough point for the market was Mr. Powell's messaging that incoming data since the last meeting suggests the ultimate level of interest rates will be higher than previously expected and that "there is more ground to cover" before it meets the test of being at a restrictive level.
Sellers stepped up in the Treasury and equity markets during and after the press conference. The 2-yr note yield initially traded down to 4.44% but settled at 4.55% and jumped to 4.62% after the close of the cash session. The 10-yr note yield fell to 3.98% but settled at 4.06% and jumped to 4.11% after the close of the cash session.
Stocks sold off in broad fashion. All 11 S&P 500 sectors closed with a loss ranging from 1.0% (utilities) to 3.8% (consumer discretionary).
Mega cap stocks suffered heavier losses than the broader market. The Vanguard Mega Cap Growth ETF (MGK) fell 3.6% today versus a 2.5% loss in the S&P 500.
On an individual basis, a few names were able to buck the downtrend after reporting quarterly results. CVS Corp. (CVS 96.80, +2.18, +2.3%), Match Group (MTCH 45.74, +1.84, +4.2%), and Mondelez Int'l (MDLZ 62.58, +0.71, +1.2%) were among the winning standouts today for the earnings reporters.
Energy complex futures settled the session higher. WTI crude oil futures rose 1.6% to $89.82/bbl and natural gas futures rose 6.9% to $6.55/mmbtu.
Cigna (CI), ConocoPhillips (COP), Cheniere Energy (LNG), Peloton (PTON), Marriott (MAR), Westlake Corporation (WLK), Kellogg (K), Moderna (MRNA), Restaurant Brands Int'l (QSR), AmerisourceBergen (ABC), Royal Caribbean (RCL), Shake Shack (SHAK), Wayfair (W), and Crocs (CROX) are among some of the more notable companies set to report earnings ahead of Thursday's open.
Looking ahead to Thursday:
- 8:30 ET: Weekly Initial Claims (consensus 222,000; prior 217,000), Continuing Claims (prior 1.438 mln), September trade balance ( consensus -$71.00 bln; prior -$67.40 bln), preliminary Q3 Productivity ( consensus 0.5%; prior -4.1%) and preliminary Q3 Unit Labor Costs (Briefing.com consensus 4.2%; prior 10.2%)
- 10:00 ET: September Factory Orders ( consensus 0.3%; prior 0.0%) and October ISM Non-Manufacturing Index ( consensus 55.2%; prior 56.7%)
- 10:30 ET: Weekly natural gas inventories (prior +52 bcf)
Dow Jones Industrial Average: -11.5% YTD
S&P Midcap 400: -16.5% YTD
S&P 500: -21.1% YTD
Russell 2000: -20.3% YTD
Nasdaq Composite: -32.7% YTD