12:05 PM EDT - The stock market, which enjoyed its best day in almost two months yesterday and started the current session on just a mildly weaker note, really hit the skids in mid-morning, as the NASDAQ and the Dow Jones Industrial Average fell by 600 points and 800 points, respectively, at their morning nadirs.
In all, stocks tumbled this morning as investors paused in the wake of a recent dramatic rally that saw the NASDAQ top 12,000, the Dow climb past 29,000, and the S&P 500 approach 3,600. As for this morning, most of the big tech names led the market retreat, with losses of 3%-5%
There was little in the news background, meantime, to have sparked the sudden dramatic selling, as key data out this morning showed a larger-than-expected drop in weekly jobless filings, a strong increase in productivity, and a solid score from the ISM Services sector.
In essence, we sense that this is thus far just a case of an extended rally hitting the halt button for one morning, at least. As for the particulars, as we pass the noon hour in New York, the Dow is now off 600 points; the S&P 500 is down 100 points; and the NASDAQ is off 500 points. – 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, fresh off a stellar August, entered the often difficult month of September on an emotional high that would continue on Tuesday, the first day of the new 30-day span. Then, after strong gains overnight in the equity futures, the stock market began yesterday's session in solid fashion and would wind up fashioning a wire-to-wire win in the major indexes. In all, the Dow Jones Industrial Average would wind up securing a 455-point advance that would carry the blue chips back past the 29,000 mark, leaving it fewer than 500 points from an all-time record.
Meanwhile, the tech-heavy NASDAQ would push past the 12,000 mark for the first time ever en route to an increase of 117 points; the S&P 500, meantime, would add 54 points, lifting that index to within 20 points of 3,600. At this point, at least, there would appear to be no stopping the bulls. Interestingly, though, yesterday's session saw catch-up by heretofore out-of favor stocks, such as Coca-Cola (KO) and International Business Machines (IBM), two stalwarts on the Dow 30, push ahead nicely, while a pair of erstwhile winners, Apple (AAPL) and electric car maker Tesla (TSLA) saw some rare profit taking.
The surge in the Dow yesterday marked that index's best day since mid-July, and that index's first close above 29,000 since February or before the coronavirus pandemic struck our shores with fury. However, the news background was not all that compelling, as Automatic Data Processing (ADP) said that U.S. private payrolls rose by 428,000 in August. That was just over one-third of the 1.17 million increase that had been forecast. Clearly, job growth is slowing. Looking ahead, the Labor Department will issue its August payroll data tomorrow morning. Job gains in the range of 1.3 million are expected along with a dip in unemployment.
In other news, the day ahead will see the release of the Institute for Supply Management's monthly report on the services sector. On Tuesday, the ISM posted better-than-expected improvement in the manufacturing sector. We would expect a decent, though perhaps slightly lower, reading in the services area, a far larger category than manufacturing. However, the bigger story will be tomorrow's payroll report. Finally, on the economic front, the Federal Reserve released its Beige Book survey of the nation's economy, and indicated that positive, but modest, gains were the rule across the United States.
It is against this somewhat mixed economic setting that Wall Street will shortly begin the penultimate trading session of the week. As for the equity futures, after an essentially flat performance early last evening, the stock market seems headed for a mixed-to-lower opening a bit later this morning, especially in the NASDAQ, where some overdue profit is suggested. Also we could see nervousness we get nearer to the employment report, although there may be somewhat less skittishness than is often the case as the Fed is seemingly on hold with regard to interest rates in the coming months. – Harvey S. Katz