Hi Everyone,
The stock market ended in the red as stocks sold off sharply toward the end of a choppy and directionless session, after surging higher on Monday. The Dow was down 391 or 1.6%, to 24,207, the Nasdaq lost 50, or 0.5%, to 9,185, while the S&P 500 fell by 31, or 3.2%, to 2,923. Decliners outnumbered advancing issues by a 3-to-2 ratio on the NYSE, where volume was a bit lighter than it has been of late.
Traders said that while today’s session started out as a typical bullish consolidation day, the last hour of trading saw a surge in volatility. As one trader explained, “Although the late-session dip looked a bit scary, the technical damage was limited and small-caps, which led yesterday’s short squeeze, remain well above last week’s levels, as measured by the Russell 2000.”
Moderna’s (MRNA, -10%) shares tumbled in late trading following Monday’s surge to a fresh new all-time high, as some experts questioned the significance of the company’s successful vaccine trial that sent the major indices soaring as well yesterday. The low number of participants and the early nature of the trial both warrant caution at this stage, but Moderna’s vaccine still remains among the most likely candidates globally. The fact that the company announced a stock offering yesterday also weighed on Moderna’s shares, but MRNA is still trading 300% higher on a year-to-date basis, despite today’s dip.
With Walmart’s (WMT, -2.7%) and Home Depot’s (HD, -3%) reports, the larger-cap earrings season ended this morning. Walmart’s numbers were much better-than-expected both on its top and bottom lines, but even though the other brick-and-mortar giant’s report was mixed, both stocks finished notably lower on the day. The two stocks are trading near their all-time highs, and bulls hope that that the consumer economy, as a whole, will recover quickly following the worst retail sales report in history as well.
Fed Chair Jerome Powell is also due to testify on the COVID-related stimulus packages, together with Treasury Secretary Mnuchin in Washington. While neither of them surprised analysts very much. Mr. Mnuchin confirmed that the Treasury is ready to take losses on the COVID loans should the recovery be slow. Treasury yields edged lower across the curve as the two reiterated that more action might be needed to stabilize the economy, which led to a rally in gold too, even though the key safe-haven sectors lagged the broader market.
The FOMC meeting minutes will highlight tomorrow’s session, with only weekly crude oil inventories being released apart from the Fed’s releases. In light of the recent comments of Chairman Jerome Powell, it will be interesting to hear the opinion of the other members of the committee concerning the further tools that the Central Bank has to assist with the economic recovery. Negative interest rates are likely off the table for now, but analysts expect strong hints on a possible extension of the Fed’s quantitative easing and lending programs.
As always, have a great evening and stay tuned!!!
Joe
