After The Close - The stock market opened lower this morning, giving way to a dramatic selloff in the afternoon. Of note, the major averages settled at their lows for the day, as the committed bulls and bargain hunters that usually show up, chose to stay on the sidelines. At the close of trading, the Dow Jones Industrial Average was down 832 points; the broader S&P 500 Index was off 95 points; and the technology-heavy NASDAQ was lower by 316 points. Market breadth showed widespread selling, with losers outpacing winners by an overwhelming margin on the NYSE. All of the major sectors retreated, with pronounced declines in the technology and energy issues. However, the defensive high-yield utilities held up relatively well, as investors looked for some safety in a challenging market.
In economic news, the Producer Price Index (PPI) rose 0.2% during the month of September, which more or less met the consensus view. However, a closer look at the numbers revealed that some inflationary pressures may be starting to build. Tomorrow, the monthly Consumer Price Index (CPI) will be released, which will likely be watched carefully by traders looking for signs of inflation. Of note, many on Wall Street are worried that higher materials prices will put a damper on corporate profits. Further, recently enacted tariffs may be starting to become an issue, as well.
In the corporate arena, few companies issued quarterly profit reports today. However, the third-quarter earnings season will soon be commencing. Of note, the major banks will be the first on deck, with JPMorgan Chase (JPM – Free JPMorgan Stock Report) and Wells Fargo (WFC) reporting their numbers at the end of the week.
Technically, the stock market has become quite volatile over the past few days, and finally took a sharp turn lower today. It remains to be seen if the bulls can regroup, or if today’s selling will be followed by further weakness in the days ahead. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
2:45 PM EDT - The stock market, in a contained selloff for several sessions going into the latest trading day, has really hit the skids this afternoon. Indeed, after being down throughout the session--often in the range of 300 points on the Dow Jones Industrial Average--has tumbled in the past few minutes, falling to a session-worst Dow decline of more than 500 points.
Behind the worsening performance of that blue chip composite and the NASDAQ, which is off by nearly 200 points, has been the steady drift higher of interest rates brought on by escalating fears of a lengthy trade conflict with China and by concerns of rising inflation.
Indeed, these latter fears only increased this morning after the government reported that the Producer Price Index jumped 0.4% last month for all wholesale items less food and energy. That was the largest uptick since last January.
In all, the Dow and the S&P 500 are off almost 2%, while the NASDAQ is down 2.2%. – Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - The stock market, under pressure for more than a week, began the latest session with a further modest loss, pulled lower once again by rising interest rates. The initial deficits were not large; however, that soon would change, as a wave of new selling would commence after 15 minutes of trading and drive the key averages down to their session lows. Worst off would be the Dow Jones Industrial Average, which would briefly sink more than 160 points on both those higher rate fears and concerns about the trade standoff with China.
The sharp and quick downturn would not build momentum, however, and beyond that point, stocks would go back and forth for the remainder of the morning and into the afternoon. It would be the same for each of the large-cap indexes. The major buying spurts, and there would be a few of them, took place just after the first hour of trading, just after noon in New York, and around 3:00 PM (EDT). Then, in the final hour of trading, further modest selling would ensue, finally taking the Dow down to a closing loss of moderate proportions.
In all, the blue chip composite would ease back by 56 points; the S&P 500 Index would drop by four points; and the NASDAQ would close nominally above the neutral line. However, the small-cap Russell 2000 would falter on the day. Meantime, key tech stocks, led by Apple (AAPL - Free Apple Stock Report), which gained three points, made possible the NASDAQ's slight uptick. Overall, though, it was another dispiriting session, with the chemical stocks, including PPG Industries, which tumbled $11 a share, as it warned of difficult third-quarter results, contributing to that loss.
Another large chemicals concern, Dow component DowDuPont (DWDP - Free DowDuPont Stock Report), also fell, albeit less sharply, as the entire chemicals group was affected by the PPG warning. As to interest rates, the latest worries, reflect fears of higher inflation down the road. That concern followed a rather large increase in average hourly wages in September. That gain appeared in last month's employment report. Also of note on the rate front, were some hawkish musings last week by Federal Reserve Chair Jerome Powell.
So, there have been a number of issues pressing on Wall Street. And for a market that is quite pricey, albeit not wholly out of line with regard to valuations, there is some vulnerability. And that is being seen with the inflation fears and the trade concerns. What will help the Street to get back in stride? Perhaps the catalyst needed will be strong third-quarter earnings, the first few reports of which will be out in the next few days. For now, we see a strong performance by corporate America--largely in line with the gains seen last period.
Looking ahead to a new day, and after a string of unimposing sessions, we see that stocks in Asia closed slightly higher in overnight dealings. In Europe, meantime, the principal bourses are thus far tracking a weaker course on political concerns. In other markets, oil prices are flat and Treasury yields are ahead nominally so far. Finally, U.S. equity futures are now suggesting a weaker opening this morning. – Harvey S. Katz, CFA