The stock market finished lower following a steep afternoon selloff, led by mega-cap the stocks like Apple (AAPL, -3.0%) and Facebook (FB, -2.6%). The Dow was down 105. or 0.4%, to 27,687, the Nasdaq lost 186, or 1.7%, to 10,783, while the S&P 500 fell by 27, or 0.8%, to 3,334. Decliners outnumbered decliners by a 6-to-5 ratio on the NYSE, where volume was moderate.
Traders said that while the Dow and the S&P 500 each broke their impressive winning streak today, bulls still have a firm grip on the market. As one trader explained, “The market remained strong ‘under-the-hood’ today, despite the scary-looking afternoon dip, and as long as the key breadth measures hold up this well, bulls can sleep well at night.”
We saw wild moves across asset classes today, as more and more investors are jumping on the “reflation” trade, thanks to the improving COVID-outlook. Gold, which has been the star among safe-haven assets in recent months, fell by 6% in one session, while silver plunged lower by over 15%. Long-dated Treasuries also fell more today than they have in any single session since early-June. The dollar hit one-week highs against its most important peers in the meantime, and should the two parties finally agree on the next stimulus bill, the outlook for the U.S. economy could further improve.
While the late-day drop wreaked havoc across the key sectors and cyclical issues gave back most of their gains, the most lockdown-sensitive stocks still managed to close in the green. The number of new COVID cases continues to trend lower in the U.S., together with hospitalizations and deaths. While improvements continue to be gradual, they could be enough to fuel the rally in the coming weeks. The fact that financials, as measured by the XLF ETF, hit a two-month high today is another sign of the risk-on shift, even though economic uncertainty regarding the second half of the year is still very high.
As always, have a great evening and stay tuned!!!