Market Recap: Wednesday, September 23 – Sports Grind Entertainment

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Stocks accelerated losses into the close Wednesday, erasing earlier gains and ending an advance that began on Tuesday. The S&P 500, Dow and Nasdaq each had their worst day in two weeks, with the S&P 500 sinking more than 2%, led by a drop in the energy and information technology sectors, to close at its lowest level since the end of July. The Nasdaq’s more than 3% decline brought the index down also to near a two-month low while the Dow fell to its lowest close since the beginning of August.

Video Transcript

SEANA SMITH: Welcome back to “The Final Round” on Yahoo Finance. I’m Seana Smith. We have seen the sell-off accelerate here over the last two hours. The Dow, the S&P and the NASDAQ all on track to close down, off over 2% . The NASDAQ the worst performer today, off over 3% right now. As it stands, some of the worst performers was the trade that seemed to be working yesterday, technology.

A lot of those big tech names leading the declines today. Of course though, all 11 of the sectors are in the red. When you take a look at a move like this, the Dow and the NASDAQ both on track to close at their lowest level in seven weeks, the S&P on track to close at its lowest level in eight weeks.

[RINGING BELL]

[BANGING]

And that does it for the trading day today. Again, the Dow closing off over 500 points, off just around 2%. The S&P falling below 3,250, closing right around 3,237 it looks like, as we shake out the final trades. Off just over 2%. And the NASDAQ, the worst performer of the day, a lot of the losses coming from some of those big tech names, but the NASDAQ off just around 3%.

Taking a look at the sector action, I mentioned all 11 of the sectors in the red today. Technology, obviously an under-performer. Energy, real estate and materials also amongst the worst performers today. Taking a look at some of the trades that we have been keeping an eye on. That work from home trade that we have been mentioning over the last couple of days is pretty much split down the middle, with Zoom barely holding on to gains. DocuSign and Peloton right around the flatline today.

Some of the other stocks’ specific stories, Nike on the flip side, hitting an all-time high today. That, of course, coming on the heels of their blowout report after the bell yesterday. Johnson and Johnson, another name, their vaccine entering its phase 3 trial, so one of the outperforms in the Dow today. And those two stocks are some of the reasons why we aren’t seeing bigger losses in the Dow today.

Of course, on the flip side, Tesla, a massive under-performer, off over 10%. Its battery day did not live up to the hype, at least in the market’s point of view. We’re going to dig into that a little bit later in the show. But for now, I want to bring in my co-host for the next 60 minutes. He’s still with us, Myles Udland. We’re also joined by Yahoo Finance’s editor in chief Andy Serwer. Rick Newman and Jared Blikre are all here to help us break it down, today’s action.

And Myles let me send it over to you first, because we’re seeing selling across the board. I know you’ve been keeping a close eye on the technical setup in the market. And when you take that into account, it really proves that maybe we could see some more selling pressure before we get back to those new highs.

MYLES UDLAND: Yeah, look, I merely follow in the wake of Jared Blikre, who actually knows what he’s talking about here. But I mean, I think given where the market has kind of traded over the last couple of weeks, and the action that we’ve seen, especially today, quite a discouraging intraday sell-off, it does seem that some of those longer term 200-day type moving averages for the major indexes, that would put the S&P around 3,100 or so. Would put the NASDAQ below 10,000, I believe in the 9,500 area.

It would seem that right now, there is momentum for the market to at least go explore those levels, and then I guess we’ll find out what happens from there. But after we broke that four-day losing streak for the S&P during yesterday’s session, things maybe looked a little bit more constructive in the market. But as Jared kind of flagged earlier as well, when you look at what’s happening with the dollar, you look at what’s happening along the yield curve in conjunction with the stock market–

–is not the most positive setup for investors, especially given that it does seem some of those really dominant trades again, which would basically be, buy US stocks, sell the US dollar, that trade continues to sputter here and maybe unwind. But we could debate sort of how far that’s going. But certainly a change in character, which is a phrase we’ve come back to quite a lot when discussing the market recently. Changing character does seem to be an apt and simple way, at least in my mind, to sort of describe what’s been happening in the last couple of weeks.

SEANA SMITH: You know, Andy, I’d love to get your thoughts just in terms of how you would describe what has been happening over the last couple of weeks, because we certainly have seen rotation in and out of some of these, I guess obviously, when we go back to technology, it was under-performer today. Yesterday, it was one of the bright spots in the market. We were seeing this rotation out of the cyclical trade. It’s interesting when you just try and wrap your head around it, and also just make sense of the market’s moves, not only over the last couple of weeks, but really over the last several months.

ANDY SERWER: Well, Seana, do you believe in half birthdays? Celebrating half birthdays?

SEANA SMITH: I mean, why not? I could be positive.

ANDY SERWER: Well, no, Jared, and Jared were invoking the sage again, points out this is the sixth month anniversary of the March 23 low. So maybe we were bound to do poorly today. I think it has been a case just during this consolidation period that the bad news is finally bad. And I don’t see a whole lot more to it than that, other than reality is kind of settling in that it’s not quick and easy.

I saw a report today that I thought was very illuminating. It said that we are now achieving or accomplishing or going through or in a situation where we’re having 80% of economic activity pre-pandemic. So right now, we’re operating at 80% speed essentially. And so you might think. well, that’s not so bad. Well, first of all, you’re talking about an economy where 1 and 2 and 3 percentage points gains is huge. So 20%, if I was to tell you one day in January, 20% down, that’s falling off a cliff. We’ve accepted as reality. But that’s a really bad, bad thing.

And the other thing is bad about that, Seana, is the 80%, that was the easy part. The next 20% is the really hard slow part. Its mass transit, its office buildings, it’s the Cincinnati Reds baseball stadium, it’s the Kansas City Opera. Speaking of opera, I don’t even know if they have one, I’m sure they do. Love you, Kansas City.

But speaking of that, we’re reminded of things in popular culture. And today, Disney postponed “Black Widow.” I’m a little late for the show, because I was watching the trailer. And then speaking of the opera, the New York City Metropolitan Opera announced that they were canceling the entire 2020-2021 season. And so that just shows, circling back to my main point, how difficult, Seana, that last 20%’s going to be.

And we get some good news from J&J, et cetera, but then Fauci says to Congress, next spring.

SEANA SMITH: Yeah. Well, that’s why it’s been so hard, and that’s why we’ve seen another, a number of our top market watchers take away their year end price targets. Some reinstating them. We’re going to talk to Brian Belski here in a few minutes. But at this point, it’s so hard to gauge when that final 20%, Andy, that you’re talking about, when we will get back to quote unquote, life as normal, what it was at the beginning of 2020. And right now, certainly there is way too much uncertainty to really be able to put an accurate date on that.

But Jared, I’d love to bring you into the conversation, just get your thoughts on today’s sell-off and some of the pressures that we’ve been seeing. Because when we take a look at today’s losses, be it the Dow or the S&P, excuse me, S&P getting awfully close to correction territory. You’ve said a few of those, few of these numbers through Dow, S&P and NASDAQ, having their worst day in two weeks.

All three of the major averages having the worst close or their lowest close in at least seven weeks. So really showing that the selling pressure that we’ve seen creep back into the markets over the last several weeks, that maybe we do have a little bit more downtime to go before we get back anywhere close to some of those record highs.

JARED BLIKRE: Yeah, I mean, to Andy’s point, too, it wasn’t any one particular headline today. It’s just a lot of things that are kind of building up, plus we had nine Fed speakers that were somewhat pessimistic on the recovery. Lots of things you can break apart there. But let’s look at the charts. This is a three-month with a 50-day moving average of the Dow. And we were talking yesterday, when you break below an important inflection point, a lot of times there’s a rally back up to it, and then a continuation. And that’s what we’re seeing here.

You look at the NASDAQ, pretty similar configuration. S&P 500, same deal here. And I also want to take a look at the financials, because that was one of my canaries the other day. When that broke down from this big pattern year to date, we had this big trend line that was intact for such a long time finally broke. And it was between the 50 and 200-day moving averages. Started moving lower two days ago. That was a big flag.

Then we have the VIX. That’s been using its 50-day as support. We can see that more clearly with the three-month chart right here. And then the 10-year T note yield. That’s heading higher today, despite really low growth prospects. And you have a situation where the US dollar is unwinding a very crowded short trade. We can see these last three days, pretty big move up there. All together, just an unwinding of a crowded trade. So it’s going to take a little while for the market to find its footing and kind of consolidate these recent losses. And of course, we could go lower first.

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