Dow Drops More Than 400 Points After A Big Rally The Day Before
Dow Drops More Than 400 Points After A Big Rally The Day Before https://digitalarizonanews.com/dow-drops-more-than-400-points-after-a-big-rally-the-day-before/
Stocks slumped Thursday, giving back some of the sharp gains seen in the previous session, as bond yields resumed their upward march.
The Dow Jones Industrial Average dropped 301 points, or 1%. The S&P 500 and Nasdaq Composite declined 1.35% and 1.84%, respectively.
A stronger-than-expected jobless claims report didn’t help sentiment, building on the notion that the Federal Reserve will keep doing aggressive rate hikes to fight inflation without concern it’s going to hurt the labor market.
The 10-year U.S. Treasury yield rebounded after dropping the most since 2020 the prior day despite briefly topping 4%. The yield last rose to 3.78%.
The moves followed a broad rally for stocks a day earlier, as the Bank of England said it would purchase bonds in an effort to help steady its financial markets and the cratering British pound. Sterling has stooped to record lows against the U.S. dollar in recent days.
It marked a stark shift from the aggressive tightening campaign many global central banks have undertaken to cope with surging inflation.
The Dow on Wednesday gained more than 500 points, or 1.9%, while the S&P 500 rose nearly 2% after hitting a new bear market low on Tuesday. Both indexes snapped six-day losing streaks.
“We are skeptical that the calmer mood in markets on Wednesday marks an end to the recent period of elevated volatility or risk-off sentiment. For a more sustained rally, investors will need to see convincing evidence that inflation is coming under control, allowing central banks to become less hawkish,” UBS’ Mark Haefele wrote in a Thursday note.
Wednesday’s rally put the major averages on pace to eke out small gains for the week, but they are still on track to cap off their worst month since June. The Nasdaq Composite is leading the monthly losses, down about 8.4%, while the Dow and S&P are on pace to close 7% and 7.5% lower, respectively.
On a quarterly basis, the Nasdaq is on track to break a two-quarter losing streak, while the Dow is headed for its third consecutive quarterly loss for the first time since the third quarter of 2015. The S&P is on pace for its third negative quarter in a row for the first time since its six-quarter negative streak that ended the first quarter of 2009.
Stock futures extend losses after jobless claims report
Stock futures extended losses after jobless claims data hit a five-month low despite the Federal Reserve’s efforts to slow the labor market.
Futures tied to the Dow Jones Industrial Average dropped 324 points, or 1.09%. S&P 500 and Nasdaq 100 futures declined 1.32% and 1.63%, respectively.
Jobless claims for the week ended Sept. 24 totaled 193,000, according to the Labor Department on Thursday. The figure was lower than the prior week’s adjusted 209,000 and below the 215,000 Dow Jones estimate.
It’s the lowest level in claims since April and the first time claims fell below 200,000 since early May.
— Sarah Min, Jeff Cox
Weak sentiment signals a short-term buying opportunity, AllianceBernstein says
AllianceBernstein says extremely poor investor sentiment could point to a short-term buying opportunity, pointing to its Composite Sentiment Indicator (CSI) that triggered a buy signal.
The signal came ahead of four positive weeks more than 70% of the time over the past 22 years, according to the firm.
“We consider this signal as a potential short term tactical buying opportunity but remain cautious on equities over a medium term horizon,” the firm’s Mark Diver wrote in a Thursday note.
Stocks on Wednesday bounced back from the year’s bear market lows, but the firm remains wary that the one-day rally points to a broader uptrend.
“We are skeptical that the calmer mood in markets on Wednesday marks an end to the recent period of elevated volatility or risk-off sentiment,” Diver wrote. “For a more sustained rally, investors will need to see convincing evidence that inflation is coming under control, allowing central banks to become less hawkish.”
— Sarah Min
CarMax shares drop after second-quarter earnings come in below expectations
CarMax shares tumbled 15.5% in premarket trading Thursday after the used car dealer reported declining sales volume that came in below analyst expectations.
Sales were down 2.9% for the three-month period ending August 31 compared to the same timeframe a year prior. Earnings per share dropped to $0.79, a 54.1% decrease from $1.72 a year ago. Analysts surveyed by Refinitiv were expecting around $1.39 in earnings per share.
CarMax purchased about 8.1% fewer vehicles from consumers and dealers. But net revenue growth was 2% higher than it was a year ago, as the company pointed to increasing profit per sold vehicle despite market-wide depreciation.
— Alex Harring
Bank of America downgrades Apple, shares slide
Apple shares dipped more than 2% after Bank of America downgraded the tech giant to neutral from buy and slashed its price target on the stock.
“Shares have outperformed significantly YTD (AAPL down 16%, S15INFT down 29%) and have been perceived as a relative safe haven,” Wamsi Mohan wrote in a Thursday note. “However, we see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand.”
CNBC Pro subscribers can read more here.
— Carmen Reinicke
Wells Fargo says sell Coinbase
Analysts at Wells Fargo initiated Coinbase with an underweight, citing rising macroeconomic pressures among other potential negative catalysts.
“Though we believe in the value of COIN’s platform, we see its early-mover advantages gradually being eroded away as the competition increasingly mimics the COIN ecosystem,” analyst Jeff Cantwell wrote in a Thursday note.
CNBC Pro subscribers can read the full story here.
— Carmen Reinicke
European stocks fall as Bank of England boost fades
– Elliot Smith
U.S. Treasury yields climb in late Asia session, 10-year recovers losses
The 10-year yield inched back up to 3.848% after dropping 25 basis points, or the most since 2020 overnight in the U.S.
The yields on the 5-year Treasury note and the 7-year Treasury note were up — as high as 4.085% and 3.986% respectively.
The yield on the policy-sensitive 2-year Treasury touched 4.227%.
Yields and prices have an inverted relationship. One basis point is equivalent to 0.01%.
— Jihye Lee
CNBC Pro: Oil and gas are making a comeback — and these mutual funds are jumping on the trend, says Morningstar
Markets have largely fallen this year, but the S&P 500’s oil and gas sector has advanced nearly 30%.
That’s attracted investors who previously shunned the sector as the clean energy push grew in the past 10 years.
Morningstar named three funds that have turned positive towards the sector and pointed to one fund manager being “the most notable energy bull.”
CNBC Pro subscribers can read more here.
— Ganesh Rao
CNBC Pro: Analyst says this FAANG stock is an evergreen winner — and investors should buy the dip
Tech stocks have had a difficult year so far but a Rosenblatt Securities analyst thinks the sell-off is an opportunity for long-term investors to buy the dip.
“Stay away from the losers,” he said, recommending “winners in the various secular battles and evolutionary battles” in tech.
Pro subscribers can read more.
— Zavier Ong
Stocks may continue this ‘oversold bounce’ over the next few days, Wells Fargo’s Harvey says
Wells Fargo’s Chris Harvey expects stocks to continue their upward move.
“The spike in short interest, retail selling skew, and BOE’s action all suggest stocks will continue their oversold bounce for the next few days,” he said in a note to clients Wednesday.
Stocks hit fresh lows earlier in the week, with the S&P 500 notching a new bear market. The sell-off was triggered by the Fed’s latest rate decision last week, which some investors believe steered the market into oversold conditions.
As the cost of capital rises and prices hover near record highs, the consensus is increasingly coming to believe that a Fed-induced recession is unavoidable, Harvey said.
“We look at a recession like a car crash,” he wrote. “You never know how bad it will be, but there is almost no ‘better-than-expected’ outcome — so policymakers need to be careful what they wish for.”
— Samantha Subin
Major averages on pace for a month of losses
Just two trading days are left in September and all the major averages are on pace to cap off the month with losses.
While Wednesday’s market comeback put the major averages on track for modest weekly gains, the Nasdaq Composite, Dow Industrial Averages and S&P 500 are slated to lose nearly 6% each in September.
The end of the third quarter also comes Friday, with the Dow on pace to cap its third negative quarter in a row for the first time since the third quarter of 2015. The S&P is slated to post its third consecutive negative quarter since its six-quarter losing streak that ended the first quarter of 2009. Meanwhile, the Nasdaq is on track to snap a streak of two consecutive down quarters.
Here’s where the major averages stand heading into Thursday:
Dow Jones Industrial Average:
Up 0.32% for the week
On track to lose 5.8% this month
Down 3.55% this quarter
Down 18.31% this year
S&P 500
Up 0.7% this week
Set for a 5.97% September loss
Down 1.75% for the quarter
Down 21.97% this year
Nasdaq Composite:
Up 1.69% this week
On pace for a 6.47% September loss
Up 0.2% for the quarter
Down 29.36% this year
— Samantha Subin, Chris Hayes
Futures open flat
Futures opened flat following a broad market rally during Wednesday’s regular trading session. Futures tied to the Dow Jones rose 10 points, or 0.04%, while S&P 500 and Nasdaq 100 futures were flat.
— Samantha Subin
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