After teasing investors with a good start to the often treacherous month of September on Friday, this month showed its historical colors yesterday with a major-league selloff. The DOW was as low as 278 points, from which it steadied and ended at 234 points in the red…down to 21,753. The DOW’s losses yesterday were primarily a function of large declines in a few of the higher priced most influential stocks like GS and other financials that dropped heavily as bond yields went down to 2.07% for the 10-year Treasury Note. In addition, UTX sold off on its takeover of COL. These two issues alone accounted for 100 points worth of losses for the DOW.
TRV continued to act poorly after the liability possibilities of Hurricane Harvey. The re-insurance stocks like RE and RNR also sold off sharply from both Harvey and upcoming Hurricane Irma. The revenge of the nerds performers were the beaten-down energy components of the DOW…HD and WMT on the rebuilding issues in Houston. Yesterday was the worst market decline in three weeks since August 17th when the market was dealing with the negative effects of the Barcelona, Spain terrorist attacks.
We had a turnaround today with the DOW gaining 54, the S&P up 7, and the NASDAQ higher by 17 points.
There were some economic reports this morning as the August ISM Non-Manufacturing Survey showed a slight gain up to 55.3. The August trade deficit widened a little bit at $43.7 billion versus $43.5 billion from the prior month on a slight decline in exports.
Travel stocks were lower on the adverse effects of the latest hurricane. PCLN was lower to $1,842. The cruise line stocks and TRVG were lower also with a profit declines. In addition, PLAY, UAL, NWL and FRAN were lower while EFII and NAV did better.
The North Korean situation was quiet…at least for today.
Donald M. Selkin
Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning. The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report. This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities. This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm. This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author. These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press. These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author.