Closing Market Summary: S&P 500 and Nasdaq Slide Below 50-Day Averages
The stock market endured a broad-based retreat on Thursday that pressured
the Nasdaq (-1.9%) and the S&P 500 (-1.6%) below their 50-day moving
averages, while the Dow (-1.5%) notched a session low just above that
mark. All ten sectors were encompassed in the slide with eight groups
posting losses of 1.0% or more.
Equities began the day with modest losses and continued heading lower
through the first 90 minutes of the session. Interestingly, dip-buyers
showed very little interest in getting involved, which resulted in new
session lows during the afternoon.
The reluctance to step into the fold was driven in part by the lack of
notable leadership. To that point, all six cyclical sectors ended in-line
or behind the S&P 500 with high-beta areas like biotechnology and
chipmakers finishing among the laggards. The iShares Nasdaq Biotechnology
ETF (IBB 273.97, -5.32) and the PHLX Semiconductor Index both lost 1.9%.
Both industry groups contributed to the underperformance of the Nasdaq,
which also had to contend with significant weakness in its top-weighted
component. Shares of Apple (AAPL 97.87, -3.88) tumbled 3.8% to end below
the 50-day moving average for the first time since April 23. As for the
technology sector (-2.3%), the group spent the day at the bottom of the
leaderboard.
Meanwhile, the remaining cyclical sectors did not fare much better. The
energy space (-1.5%) displayed relative strength in the early going, but
fell in line with the market as the session wore on. The growth-sensitive
sector widened its September decline to 7.1%.
The wide-ranging slide did not spare typical areas of relative strength
like blue chip names and utility stocks. All 30 Dow components settled in
the red with just three index members posting losses slimmer than 1.0%. As
for utilities, the sector fell 0.6% despite a retreat in Treasury yields.
The 10-yr note climbed throughout the session for a half-point gain to
lower the benchmark yield six basis points to 2.51%.
Also of note, the Dollar Index (85.23, +0.19) pulled back from its morning
high, but remained at its best level since 2010. The greenback retreated
from highs amid intraday strength in the Japanese yen and the British
pound. The yen rallied from its overnight low of 109.39 to 108.70 against
the dollar, while the pound spiked off its low after Bank of England
Governor Mark Carney said the first rate hike from the BoE has gotten
closer.
The daylong weakness caused participants to increase their demand for
volatility protection, sending the CBOE Volatility Index (VIX 15.95,
+2.68) to its highest level since early August.
Participation was above average with nearly 720 million shares changing
hands at the NYSE.
Economic data included Initial Claims and Durable Orders:
* The initial claims level increased by 12,000 to 293,000 from an
upwardly revised 281,000 (from 280,000), while the consensus expected an increase to 300,000
* Once again, the Department of Labor reported that there were no
special factors impacting the claims level, which implies labor
market conditions are at, or very near, full employment
* Durable goods orders fell 18.2% in August after increasing a slightly
downwardly revised 22.5% (from 22.6%) in July, while the
consensus expected a decline of 16.3%
* A surge in aircraft orders in July resulted in the largest
monthly increase in overall durable goods last month. The normal
payback period came immediately and resulted in the largest
monthly decline in overall orders in August
Tomorrow, the third estimate of Q3 GDP will be released at 8:30 ET
(consensus 4.6%), while the final reading of the Michigan
Sentiment index for September will cross the wires at 9:55 ET (consensus
85.0).
* Nasdaq Composite +7.0% YTD
* S&P 500 +6.4% YTD
* Dow Jones Industrial Average +2.2% YTD
* Russell 2000 -4.7% YTD