After The Close
The stock market attempted to move up at the start of today’s session, but soon reversed course, and descended into negative territory, with losses mounting as the day progressed. At the close of trading, the Dow Jones Industrial Average was down 414 points; the broader S&P 500 Index was off 51 point; and the technology-heavy NASDAQ was lower by 195 points. Market breadth was overwhelmingly negative, with losers easily outpacing winners on the NYSE. All of the major market sectors lost ground today, led lower by the volatile technology stocks. In contrast to yesterday’s market, the utility issues did not attract buyers that might be looking for safety or dividend income.
In economic news, the final estimate for third-quarter GDP showed the economy expanding at a 3.4% annualized rate. This figure more or less matched the consensus view. Nonetheless, investors did not seem impressed, remaining fearful that a slowdown is in the making, and that the Federal Reserve may be behind the curve. Further, the possibility of a government shutdown looms on the horizon, adding to Wall Street’s worries.
In the corporate arena, we recently heard from NIKE (NKE – Free NIKE Stock Report). Shares of the sneaker giant traded higher in response to an encouraging report. Soon, the fourth quarter will come to a close, and in the weeks ahead many companies will release their results and provide guidance for 2019. Hopefully for the bulls, the news will be positive, and might provide a foundation for equity prices.
Technically, the stock market continues to lose ground. It does not help that it is the end of the year, and that investors are looking to reposition their accounts for various purposes. Perhaps, the outlook will improve in 2019. It seems reasonable to expect a comeback in the new year.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
Before The Bell
The Dow and the rest of the market then remained in negative territory for the balance of the morning and into the afternoon, with that index off by nearly 200 points as we passed the 90-minute mark of the trading day. The latest setback, on top of declines in the prior days this week, left the three major large-cap indexes, the Dow and the S&P 500 in the red for the year to date, while the NASDAQ and the small-cap Russell 2000 are now in a bear market, having succumbed to a cumulative peak-to-trough decline of more than 20%--the benchmark definition of a bear market.
Meanwhile, the equity market would continue weakening into the lunch hour, with the Dow falling to a loss of more than 430 points, dragging that index back below 23,000. An attempt to rally then followed with nearly 200 points of that deficit being pared. Material losses were tallied across the board in the session to that point. Among individual casualties, we saw shares ConAgra (CAG) tumble after releasing better-than-expected quarterly net, but also weaker sales from continuing operations. That issue had fallen 17% by the mid-afternoon. Also hitting a new 52-week low were shares of International Business Machines (IBM – Free IBM Stock Report).
Things worsened still further as the afternoon settled in, with the Dow tumbling to a session-worst loss of nearly 700 points after outgoing House Speaker, Paul Ryan said that the President indicated he would not sign the short-term funding deal worked out by Congress that was designed to avert a partial government shutdown. That's because the bill, as currently written, did not contain the necessary funds for a border wall. The funding bill is designed to keep the government fully open through February 8, 2019. The possibility of a partial shutdown, added to the Fed worries, have really put the bulls on edge.
Still, after plunging to those session lows, the market regained some stability, with the Dow trimming about half of its afternoon losses; the NASDAQ, too, recaptured some ground, but the comeback faded as we moved inside the final hour of trading. Then, after the Dow again had tumbled by more than 600 points, the market made a last-minute comeback that carried the averages off of their nadir. At the close, the Dow would be down 464 points; the S&P 500 would fall 40 points; and the NASDAQ would drop by 108 points. Oil, too, would tumble, losing about 4% on the day.
Finally, on the economic front, in a news item that got little attention, the Conference Board reported that the Leading Economic Index increased by 0.2% in November, a flat reading had been the forecast. This is an important gauge of upcoming business activity and suggests that the economic expansion still has a ways to go, if at a likely more deliberate pace in 2019. But with all eyes on the Fed, trade, and the Washington political scene, with all of its contention, the Leading Indicators received scant attention yesterday.
Now, we face a new day, and after the fireworks of the past few sessions, we see that stocks were generally lower in Asia overnight; on the Continent, the principal bourses are now showing small early losses. Elsewhere, oil prices, off sharply yesterday, now are slightly lower and Treasury note yields, up marginally in the latest session, are flat so far this morning. Finally, the U.S. equity futures are mixed-to-weaker ahead of the opening; trading resumes shortly, in what again should be a volatile session. Stay tuned.
