Stocks Tumble, as Losses Accelerated in Late-day Action…..
U.S. equities tumbled, finishing near the lows of the day, courtesy of continued volatility in the Information Technology sector, which saw renewed pressure after being the catalyst of yesterday’s rebound. Shares of RH, Quest Diagnostics and Aaron’s Inc all bucked the downtrend and traded higher after offering upbeat guidance. But, weekly initial jobless claims and producer price inflation both came in higher than expected, and political uncertainty persisted. The foreign exchange markets were in focus as the euro rallied in the wake of an unchanged monetary policy decision from the European Central Bank (ECB), and the British pound continues to be hampered by resurfaced Brexit concerns, but the U.S. dollar pared the early losses and finished slightly higher. Treasury yields reversed course to finish lower as bond prices turned higher and gold nudged to the downside, while crude oil prices lost ground. In other equity news, Citigroup named Jane Fraser as its CEO and the first female chief of a major global bank. Europe finished mostly lower in volatile trading following the ECB’s decision, while markets in Asia were higher.
The Dow Jones Industrial Average fell 406 points (1.5%) to 27,535, the S&P 500 Index declined 60 points (1.8%) to 3,339, and the Nasdaq Composite decreased 222 points (2.0%) to 10,920. In moderate volume, 911 million shares were traded on the NYSE and 3.8 billion shares changed hands on the NASDAQ. WTI crude oil lost $0.75 to $37.30 per barrel and wholesale gasoline was $0.02 lower at $1.10 per gallon. Elsewhere, the Bloomberg gold spot price declined $3.83 to $1,943.01 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—ticked 0.1% higher to 93.38.
Jobless claims and wholesale price inflation both a bit higher than expected…..
Weekly initial jobless claims came in at a level of 884,000 for the week ended September 5th, just above the Bloomberg estimate of 850,000, and matching the prior week’s upwardly-revised level. The four-week moving average declined by 21,750 to 970,750, while continuing claims for the week ended August 29th rose by 93,000 to 13,385,000, north of estimates of 12,904,000. The four-week moving average of continuing claims fell by 523,750 to 13,982,000.
The Producer Price Index (PPI) showed prices at the wholesale level in August rose 0.3% m/m, versus forecasts calling for a 0.2% gain and July’s unrevised 0.6% increase. The core rate, which excludes food and energy, increased 0.4% m/m, above estimates of a 0.2% gain and compared to July’s unadjusted 0.5% rise. Y/Y, the headline rate was 0.2% lower, compared to projections of a 0.3% decline and versus the prior month’s unadjusted 0.4% decrease. The core PPI gained 0.6% y/y last month, north of estimates to match July’s unrevised 0.3% rise.
July wholesale inventories were revised lower to a 0.3% m/m decline, versus expectations to be unrevised at a 0.1% dip, and compared to June’s unadjusted 1.3% drop. Sales rose 4.6% after June’s upwardly-revised 9.0% gain.
Treasuries reversed course to finish lower amid the downdraft in the stock markets, as the yield on the 2-year note was little changed at 0.15%, while the yield on the 10-year note lost 2 basis points (bps) to 0.68% and the 30-year bond rate shed 3 bps to 1.43%.
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