Dow -398.51 at 41954.24, Nasdaq -213.95 at 17923.90, S&P -55.13 at 5695.94
Today’s trade featured a negative bias throughout the entire session. The major indices traded slightly lower for most of the day before selling picked up in the afternoon. The S&P 500 ultimately settled 1.0% lower, the Nasdaq closed 1.2% below its prior close, the Dow declined 0.9%, and the Russell 2000 settled with a 0.8% loss.
The late deterioration coincided with some mega caps and chipmakers sliding below prior closing levels. Meta Platforms (META 584.88, -11.06, -1.9%), which had been up as much as 1.2% at its best level, and Broadcom (AVGO 175.08, -1.56, -0.9%), which had been up as much as 0.9%, are among the standouts in that respect.
Apple (AAPL 221.69, -5.11, -2.3%) and Amazon.com (AMZN 180.88, -5.63, -3.0%) extended downgrade-related losses in the afternoon. AAPL shares were downgraded to Hold from Buy at Jefferies and AMZN shares were downgraded to Equal Weight from Overweight at Wells Fargo.
Some selling interest was related to profit-taking activity after the solid run of late. The major indices were near record highs and ended last week on an upbeat note following a very strong September jobs report.
Downside action was also related to ongoing geopolitical worries about a potential escalation between Israel and Iran. This fear caused another jump in oil prices. WTI crude oil futures rose 3.7% to $77.18/bbl. The price action in oil was also in response to concerns about Hurricane Milton, which has intensified into a Category 5 hurricane.
Monday’s sharpest losses hit stocks of utilities and real-estate owners. These stocks tend to pay big dividends, meaning they can see potential buyers leave when bonds pay more in interest.
Utility stocks dropped 2.4%, the sharpest loss among the 11 sectors that comprise the S&P 500 index. Vistra’s drop was 6.8%, and Duke Energy’s slide was 3.2%.
I think this market is fine even if rates traded in the 4.5-4.75% range, but the surprising move higher in rates caught some weak hands off guard, hence some selling.
The market is chopping like crazy now, so we must take these ebbs and flows in stride as we figure out a solid direction.
The good news is that NVDA broke out of that downtrend line and is over $125, two things I’ve been looking for. If we can get follow-through from NVDA, it should help the chips overall (SMH, SOXX) and tech in general.
The MAG stocks, TSLA, AMZN, APPL, etc., are still under a little pressure.
Bitcoin is starting to stir again, so I’ll be watching.
See you in the morning.