Hi Everyone,
The stock market outright crashed today, losing the most since the worst days of the March crash, as investors turned gloomy regarding the outlook for the global economy. The Dow was down 1862, or 6.9%, to 25,128, the Nasdaq lost 528, or 5.3%, to 9,493, while the S&P 500 fell by 188, or 5.9%, to 3,002. Decliners outnumbered advancing issues by a 30-to-1 ratio on the NYSE, where volume was relatively heavy.
Traders said that there was nowhere to hide on Wall Street, and today’s reversal caused serious short-term technical damage. As one trader explained, “The major indices finished at their intraday lows. Selling pressure intensified as the afternoon progressed, and small-caps remained relatively weak throughout the session, confirming the sharp risk-off shift.”
Today’s session was the third-worst day for the Dow with regard to point-losses, and it almost made it to the list of the worst 20 days concerning percentage losses. The cyclical sectors hurt the industrial average, but the S&P 500 did not fare much better, as the massacre among mega-cap banks put pressure on the index. The Russell 2000 lost even more than its large-cap peers, and the key breadth measures finished the session with extremely negative readings, as bulls rushed for the exits.
Even though the Fed pledged to keep its monetary policies accommodative yesterday, Chairman Jerome Powell’s cautious words regarding the economy have weighed on investor sentiment today. The week’s negative economic surprises likely added to the gloom too, but despite the recent uptick in some of the reopening U.S. states, the post-lockdown recovery still seems to be on track. On another positive note, Mr. Powell confirmed that the Fed still has plenty of tools to support the economy, should the recovery be sluggish, so bulls will likely get a helping hand from the Central Bank in the second half of the year.
The reports suggesting that the Trump administration will only discuss the next round of stimulus in late-July also put pressure on stocks today. Even though there is bipartisan support for further government action, the Presidential campaign might make it harder to reach an agreement than in the case of the previous packages, which were approved at the height of the crisis. That said, the already approved programs are already huge, and while investor sentiment quickly deteriorated, the U.S. economy will have plenty of support in the coming months.
As always, have a great evening and stay tuned!!!
Joe
