Wall Street was tentative to open Friday’s action after the Commerce Department announced that it will prohibit TikTok and WeChat transactions as of September 20 — and more in Friday’s WealthPress stock market update.
And more importantly for TikTok, it will be shutdown altogether on November 12 if there is no takeover deal.
The TikTok drama has become a high-profile reminder of the tensions between the the U.S and China, with Oracle, Microsoft and Walmart in the mix to take over U.S. operations of the social media platform.
Quadruple witching also added to the choppy session while pushing fresh monthly lows for all of the major indexes. The third Friday of every March, June, September and December is when this event happens, with four classes of options contracts expiring.
The S&P 500 sank 1.1%, with the late-session low touching 3,292 on the close back below the 50-day moving average.
The Nasdaq also lost 1.1% following the afternoon pullback to 10,639.
The Russell 2000 declined 0.4% on the second-half fade 1,519.
The Dow dropped 0.9% while holding its 50-day moving average after trading to an intraday low of 27,487.
Real Estate was the weakest sector after tanking 2% while Utilities and Technology declined 1.8% and 1.7%, respectively. There was no sector strength.
Unity Software (NYSE: U) priced its initial public offering of 25 million at $52. The deal priced above the $44-$48 range. Goldman Sachs and Credit Suisse acted as joint book running managers for the offering. Shares opened at $75, traded up to $76.79 before closing at $68.35.
Unity makes software that designers use to create video games. The system provides a framework in which developers can build their games, and only starts charging a licensing fee after a certain revenue milestone has been crossed. The company lost $163.2 million last year on revenue of $541.8 million, with sales growing 42.2% and losses increasing by 24% from the year before.
For the week, the S&P 500 fell 0.7% while the Nasdaq was off 0.6%. The Dow dipped 8 points, or 0.03%. The Russell 2000 rallied 2.7%.
Next week earnings are extremely light with AutoZone, Inc. (NYSE: AZO), KB Home (NYSE: KBH) and Nike Inc. (NYSE: NKE) highlighting Tuesday’s action. These companies should provide further insight on how the economic recovery is going with the retail and homebuilder sectors likely being impacted.
An analyst at Needham raised the firm’s price target on Nike to $132 from $113 while keeping a Buy rating on the shares. Another analyst at Morgan Stanley analyst raised the firm’s price target on Nike to $142 from $121 and kept an Overweight rating on shares.
Meanwhile, an analyst at DA Davidson kept a Buy rating for AutoZone and a $1,380 price target, saying the company should outperform Wall Street’s forecasts.
Volatility was a little heightened for the week but held key levels of resistance to keep the stock market in non-panic mode. We cover more on this subject below. However, Tech is back in correction territory as this week’s losses have pushed the Nasdaq more than 10% lower from the beginning of the month all-time high of 12,074.
European markets closed lower across the board.
France’s CAC 40 tumbled 1.2% while the Stoxx 600, UK’s FTSE 100, and Germany’s DAX 30 all fell 0.7%. The Belgium20 gave back 0.4%.
Asian markets settled mostly higher to end the week.
China’s Shanghai surged 2.1% and Hong Kong’s Hang Seng climbed 0.5%. South Korea’s Kospi climbed 0.3% and Japan’s Nikkei added 0.2%. Australia’s S&P/ASX 200 was lower by 0.3%.
Current Account deficit for Q2 widened sharply to -$170.5 billion from The $111.5 billion deficit in Q1. The goods and services deficit widened to -$164.9 billion from -$126.5 B billion while the goods deficit jumped to -$219.3 billion from -$191.7 billion. The surplus on the services balance fell to $54.4 billion from $65.3 billion. The primary income balance dropped to $29.2 billion from $52 billion and the secondary balance on income edged up to -$34.9 billion from -$37.1 billion.
Consumer Sentiment for September rose 4.8 points to 78.9 in the preliminary report, versus forecasts for a print of 75, after rising 1.6 points to 74.1 in August. The current conditions index improved to 87.5 from 82.9 while the expectations index rose to 73.3 from the 68.5 reading in August’s 68.5. The 12-month inflation gauge slumped to 2.7% versus 3.1% while the 5-year index slowed to 2.6% from 2.7% last month.
Leading Indicators rose 1.2% to 106.5 in August after rising 2% to 105.2 in July. Expectations were for a rise of 1.3%. Half of the 10 indexes made positive contributions, led by jobless claims (0.97%), ISM new orders (0.25%), and stock prices (0.22%). Declines were paced by consumer expectations (-0.11%).
Baker-Hughes reported the U.S. rig count was up 1 from the prior week to 255, with oil rigs lower by 1 to 179, gas rigs up 2 to 73, and miscellaneous rigs unchanged at 3. The U.S. rig count is down 613 rigs from last year’s count of 868, with oil rigs down 540, gas rigs down 75, and miscellaneous rigs up 2 to 3. The U.S. offshore rig count was down 1 to 14, and is down 11 year-over-year.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) fell for the fourth time in five sessions following the intraday pullback to $163.46. Current and upper support at $163.50-$163 was breached but held. A close below the latter reopens further weakness toward $162.50-$162.
Lowered resistance is at $164-$164.50 with more important hurdles at $165.50-$166 and the 50-day moving average.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was down for the first time in three sessions after testing a first half low of 25.28. Near-term and upper support at 25.50-25 was breached for the fourth time in five sessions but held. A close below the latter and the 50-day moving average would be a very bullish signal for the stock market and would suggest a further pullback toward 23.50-23.
The bounce to 28.10 afterwards challenged but held lower resistance at 28.50-29 and the 200-day moving average. A close above the latter could signal a fresh round of selling pressure in the stock market.
The S&P 400 Mid Cap Index (NYSE: MID) extended its losing streak to two-straight sessions after tagging an intraday low of 1,852. Prior and upper support at 1,875-1,850 was breached and failed to hold. A move below the latter would suggest additional weakness toward 1,825-1,800 and the 200-day moving average and levels from mid-July.
Resistance is at 1,900-1,925 and 50-day moving average. A close above the latter would signal near-term selling pressure has abated with another retest toward 1,950-1,975 back in focus. This month’s peak reached 1,970 and the August top is at 1,975.
RSI (relative strength) remains in a downtrend after falling below upper support at 45-40 with the latter holding since early April and throughout this month. A move below 40 would indicate additional weakness toward 35-30 and levels from March. Resistance is at 50.
The Energy Select Sector SPDR Fund (NYSEArca: XLE) fell for the first time in three sessions with the afternoon low tapping $33.26. Slightly rising and upper support at $33.50-$33 was tripped but held. A close below the $32.50 level and the monthly low of $32.35 would be a renewed bearish development with additional selling pressure toward $32-$31.50 and levels from late April.
Resistance at $34-$34.50. A close above the $35 level would signal a possible retest toward $35.50-$36 and the 50-day moving average.