Wall Street traded in the red following disappointing economic news and Federal Reserve Chair Jerome Powell’s previous comments on the uncertainty over the pace of the economic recovery — and more in Thursday’s WealthPress stock market update.
Frustrating negotiations over a fifth coronavirus stimulus package also weighed on sentiment. Sen. Chuck Grassley, R-Iowa, said the chances of a new stimulus deal before the November 3 general election are remote.
The Nasdaq closed down 1.3% after trading to a midday low of 10,783.
The S&P 500 was lower by 0.8%, with the intraday bottom hitting 3,328.
The Russell 2000 declined 0.6% following a pullback to 1,526 shortly after the opening bell.
The Dow had its winning streak snapped at four sessions after falling 0.5%, with the opening low tapping 27,647.
Materials showed the most strength after rising 0.7%. Real Estate and Communication Services paced sector laggards with losses of 2.2% and 1.8%, respectively.
Dave & Buster’s Entertainment Inc. (Nasdaq: PLAY) shares plummeted 26% after warning it might file for bankruptcy if it can’t reach a deal with its lenders. The company reported earnings last week with a loss of $1.24 a share on revenue north of $50 million while saying coronavirus-related closures have resulted in a significant decrease in foot traffic.
First Solar Inc. (Nasdaq: FSLR) tumbled 11% after a secondary offering of 8.65 million shares, or approximately 8.2% of the company’s outstanding common stock, was sold. All shares sold in the offering were from one investor. The company did not sell any shares and did not receive any proceeds from the sale. Morgan Stanley acted as the sole underwriter for the offering.
American Well’s (Nasdaq: AMWL) initial public offering of 41 million shares was priced at $18. Morgan Stanley, Goldman Sachs and Piper Sandler acted as joint book running managers for the offering. Additionally, Hygo Energy Transition (Nasdaq: HYGO) launched an IPO of 23 million shares between $18-$21, with Morgan Stanley and Goldman Sachs acting as joint book-running managers.
Thursday’s weakness pushed the major indexes back into their previous trading ranges with the Dow, the Russell 2000 and the S&P remaining slightly above their 50-day moving averages. The Nasdaq’s close back below its 50-day moving average was a slightly bearish development signaling additional weakness.
Closings have been bearish over the past few Fridays, and the back half of September is typically a weak month for the stock market. It will be important for bulls to reverse this trend Friday to avoid a third straight weekly loss.
European markets settled lower after the Bank of England left interest rates unchanged and maintained its current level of asset purchases, warning that the outlook for the economy remains uncertain.
France’s CAC 40 was down 0.7% while the Stoxx 600 and UK’s FTSE 100 fell 0.5%. Germany’s DAX 30 lost 0.4% and the Belgium20 dipped 0.1%.
Asian markets were lower across the board after the Bank of Japan kept its negative interest rate of 0.1% on bank deposits, as well as its policy of unlimited purchases of Japanese government bonds.
Hong Kong’s Hang Seng tanked 1.6% while Australia’s S&P/ASX 200 and South Korea’s Kospi sank 1.2%. Japan’s Nikkei dropped 0.7% and China’s Shanghai declined 0.4%.
Initial Jobless Claims fell 33,000 to 860,000 — versus forecasts for 850,000 — after a revised 893,000 print last week. The four-week moving average declined 61,000, from 973,000 to to 912,000. Continuing claims dropped 916,000 to 12,628,000.
Housing Starts dipped 5.1% to a 1,416,000 pace in August — versus expectations of 1,486,000 — and follows the 17.9% surge to 1,492,000 in July. All of the headline weakness was in multifamily starts, which were down to 395,000 after climbing to 511,000 in July. Single family sales increased to 1,021,000 after a previous rise to 981,000.
Building Permits fell to 1,470,000 in August following a prior jump to 1,483,000 in July.
Philadelphia Fed Business Outlook Survey was down 2.2 points to 15 in September — weaker than expectations of 15.5 — after declining 6.9 points to 17.2 in August. The employment index rose from 9 to 15.7, while new orders improved from 19 to 25.5. Shipments surged from 9.4 to 36.6. Prices paid soared to 25.1 versus 15.3, while prices received jumped from 12.4 to 18.4. Inventories sank to -10.8 from -1.9. The six-month outlook index climbed to 56.6 versus 38.8, with employment jumping from 29.5 to 42.7, and new orders edging up to 56.9 versus 55.1. Prices paid increased to 57.7 versus 37.7, with prices received rising from 30.2 to 42.4. Capital expenditures rose from 23 to 31.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) snapped a three-session slide after trading to a high of $164.96. Near-term and lower resistance at $165-$165.50 was challenged but held for the second straight session. A close above $166 and the 50-day moving average would be a more bullish signal for a retest toward $167-$167.50.
Current and rising support is at $164-$163.50.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for second straight session following the first-half surge to 28.92. Prior and lower resistance at 28.50-29 was breached but held. A close above the latter and the 200-day moving average would indicate additional strength toward 30-30.50.
Support remains at 25.50-25 and the 50-day moving average.
The Invesco QQQ Trust (Nasdaq: QQQ) fell for the second straight session with the intraday low tapping $266.68. Prior and upper support from last Friday at $267-$266.50 was breached but held. A close below the latter would suggest a further slide toward the $262.50-$260 area.
Lowered resistance is at $272.50-$273 and the 50-day moving average.
RSI (relative strength) is in a downtrend with key support at 40 and the monthly low holding. A close below this level would get weakness toward 35, with the late March low in play. Resistance is at 45-50.
The SPDR S&P Retail ETF (NYSE: XRT) zigzagged for the fourth straight session following the intraday pullback to $50.01. Prior and upper support at $50.50-$50 was tripped but held. A move below the latter would signal further weakness toward $49.50-$49 and the 50-day moving average.
Resistance is at $51-$51.50. A close above the $52 level would be a bullish signal for a retest toward $54-$53.50, with the all-time high from earlier this month at $53.66.