Before The Bell
The stock market started strongly yesterday, moving higher throughout the early morning. The S&P 500 broke even on the year during the middle portion of the trading day. Meanwhile, the Dow Jones Industrial Average was up by over 400 points at its apex. Too, the NASDAQ continued higher through the morning and hit an all-time intraday high. However, the markets turned to the downside, as coronavirus-related worries started to grow, headlined by a story breaking that California Governor Newsome had ordered all bars and indoor operations of other businesses to close. Overall, this trend lower continued throughout the second half of the day, and the markets finished at relative lows. Though the Dow managed to eke out a minor gain of 11 points, the S&P 500 was lower by 30 points, and the NASDAQ was down 227 points. This move lower caused technology stocks to be among the worst performers on the day. Too, these moves lower were widespread as decliners outpaced advancers by a 1.6-to-1.0 ratio.
The futures markets were slightly positive after such a weak end to the day yesterday, and those same futures were trading higher in the early evening. The trend upward continued, though with some volatility, throughout the night. By early morning, the market was in line for a strong start to the day.
In commodity news, oil prices ended the day lower as worries grew about oversupply due to coronavirus. Meantime, U.S. Treasury bond yields were mostly lower, and the long-term yields fell more than those with shorter durations. This flattening of the yield curve usually is negative for financial earnings. The VIX Volatility Index ended the day much higher, signaling high demand for options protection.
Meantime, some Federal Reserve board members and regional presidents will give speeches later today. On the earnings front, several large banks have released quarterly results, which will provide some insight into how the broader economy did during the height of the coronavirus lockdowns during the second quarter. Overall, we expect these stories and any other developments to drive sentiment in the trading session today.
- John E. Seibert III
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
