Stock Market Update: Tuesday, September 29, 2020

Indexes traded in tight ranges and on both sides of the ledger throughout as Wall Street anxiously awaits the upcoming presidential debate — and more in Tuesday’s stock market update.

Another solid report on the housing market sparked opening strength before lackluster action ensued afterward.

White House economic adviser Larry Kudlow said President Donald Trump will focus on the policies and tax cuts that “will work again” if he is reelected. He also added stimulus talks are ongoing.

Stock Market Update 

The S&P 500 fell 0.5% after trading to an intraday low of 3,327.

The Dow also fell 0.5% with the midday low reaching 27,338.

The Russell 2000 was down 0.4% following an intraday pullback to 1,492.

The Nasdaq gave back 0.3% with the afternoon low reaching 11,065.

Communication Services was the only sector that closed higher after nudging up 0.1%. Energy was the leading sector laggards after sinking 2.8%.

Stock Market Movers

Shares of Big Lots, Inc. (NYSE: BIG) tested a high of $51.90 before slipping 1.4% after the company provided an update on expected earnings results for the third quarter. Big Lots said comparable sales will increase in the mid-teens for the quarter with earnings in the range of 50-70 cents per share. Current estimates are pegged at 21 cents a share on revenue of $1.28 billion when the company announces numbers the first week of December.

Stock Market Outlook 

Tonight’s presidential debate could set the tone for the narrative going forward in the race. But overall, debates haven’t been a major stock market mover. On average, dating back to 1960, when televised debates started in American politics, the S&P 500 has fallen the next day by 0.3%. 

Returns over the five-day period following a debate have averaged a pullback of 0.9%, and the S&P 500 has fallen 1.8% over the next 10 days. For a one-month period, the decline for the S&P 500 is 2% following a presidential debate.

This could be due in part to normal volatility and bearishness heading into a presidential elections — particularly because Wall Street loathes uncertainty.

Global Economy

European markets settled lower across the board.

The Belgium20 fell 0.8% while the Stoxx 600 and UK’s FTSE 100 declined 0.5%. Germany’s DAX 30 was off 0.4% and France’s CAC 40 dipped 0.2%.

Asian markets were mixed after the World Bank projected growth in China to be at 2% this year, while the rest of the East Asia and Pacific region is expected to see a 3.5% contraction. 

South Korea’s Kospi gained 0.9% while China’s Shanghai added 0.2%. Japan’s Nikkei edged up 0.1%. Hong Kong’s Hang Seng lost 0.9% and Australia’s S&P/ASX 200 declined less than a point.

U.S. Economy

Advance goods trade deficit widened to minus $82.9 billion in August after climbing to minus $80.1 billion in July, representing the biggest deficit on record. Exports increased 2.8% to $118.3 billion, with imports rising 3.1% to $201.3 billion. Wholesale inventories increased 0.5% to $637 billion in August after slipping 0.1% to $632.3 billion previously. Retail inventories edged up 0.8% to $599.7 billion following July’s 1.2% rise to $594.8 billion.

Consumer Confidence surged 15.5 points to 101.8 in September, well above expectations of 88.8, and erasing the unexpected minus 5.4 point slump 86.3 in August. Most of the gain was in the expectations component, which soared to 104 from 86.6 in August. The present situation index improved to 98.5 after sliding to 85.8 last month while the job strength diffusion index rose to 2.9 after falling to -2.2 in August. The 12-month inflation gauge slipped to 5.7% versus 5.8% previously.

S&P Corelogic Case-Shiller climbed 0.6% to a new record high of 226.6 in July for the 20-city index after June’s 0.3% gain to 225.1. The 12-month pace accelerated to 3.95% year-over-year versus the 3.46% pace previously. The 10-City index increased 0.6% to 238.3 and is 3.30% year-over-year higher on a 12-month basis, versus 2.8% previously. All 20-cities surveyed posted annual gains, led by Phoenix (9.2%) and Seattle (7%), with Chicago (0.8%) bringing up the rear.  

Stock Market Sentiment

The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) showed strength for the fourth time in five sessions with the intraday high reaching $165.24. Near-term and lower resistance at $165-$165.50 was cleared but held. A close above $166 and the 50-day moving average would be a more bullish signal for a retest toward $167-$167.50.

Current support is at $164.50-$164 followed by $163-$162.50.

Volatility Index

The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a three-session slide after testing a high of 27.43. Lower resistance at 27-27.50 was breached but held. A close above the latter would signal a retest toward 29-29.50 and the 200-day moving average.

Support remains at 25.50-25 and the 50-day moving average.

Stock Market Analysis

The S&P 400 Mid Cap Index (NYSE: MID) had three session winning streak snapped after tagging an afternoon low of 1,838. Near-term and upper support at 1,850-1,825 was breached and failed to hold. A move below the latter and the 200-day moving average would suggest additional weakness toward 1,800-1,775 with the monthly low at 1,769.

Resistance is at 1,875-1,900 and 50-day moving average. A close above the latter would indicate another retest toward 1,925-1,950.

RSI (relative strength index) has flatlined with upper support at 45-40 holding. A move below the latter would indicate additional weakness toward 35-30 and levels from last week. Resistance is at 50 and the mid-month peak.

Sector

The Real Estate Select Sector SPDR Fund (NYSE: XLRE) was down for the first time in four sessions after trading to a midday low of $34.88. Current and upper support at $35-$34.75 was breached but held.  A close below the latter reopens downside risk toward $34.25-$34.

New resistance is at $34.25-$34.50 following the close back below the 200-day moving average.

RSI is back in a downtrend after failing key resistance at 50. Support is at 45-40 with the latter representing the monthly low.

Check back for the most important news and numbers each day after the closing bell here in the WealthPress stock market update.