Wall Street was choppy before closing deep in the red following a late-day tweet from President Donald Trump saying he is ending talks with the Democrats over another stimulus package — and more in Tuesday’s stock market update.
The tweet went on to say House Speaker Nancy Pelosi, D-Calif., is not negotiating in good faith and that he planned to pass a major stimulus bill after he is reelected.
Federal Reserve Chair Jerome Powell repeated the economic recovery has progressed more quickly than expected, adding the outlook is still highly uncertain and has moderated since early summer. He also reiterated the need for more fiscal action, noting the rebound will be stronger if fiscal and monetary policy work together.
The Nasdaq fell 1.6% after testing an intraday low of 11,124.
The S&P 500 fell 1.4% with the late-day bottom reaching 3,354.
The Dow dropped 1.3% after kissing an afternoon low of 27,728.
The Russell 2000 declined 0.3% following the close on the session low of 1,577.
Utilities were the only sector that showed strength after gaining 0.9%. Communication Services and Consumer Discretionary were the weakest sectors after sinking 2.1% and 1.9%.
Boeing Co. (NYSE: BA) shares fell nearly 7% and weighed on the Dow after the company lowered its expectations for new commercial aircraft demand over the next 10 years. Boeing said it will be a years-long slump in travel demand due to the coronavirus pandemic.
The company expects it will need 18,350 planes worth $2.9 trillion over the next decade, an 11% drop from its forecast a year ago.
The number of companies reporting earnings remains light ahead of next week’s official start for the third-quarter season. Lamb Weston Holdings Inc. (NYSE: LW), RPM International Inc. (NYSE: RPM) and Saratoga Investment Corp. (NYSE: SAR) will announce numbers Wednesday.
Acuity Brands, Inc. (NYSE: AYI), Domino’s Pizza, Inc. (NYSE: DPZ) and Helen of Troy Limited (Nasdaq: HELE) highlight Thursday’s action. Domino’s is expected to earn $2.78 a share on revenue of $952 million. The company has topped forecasts over the past three quarters and by 15 cents twice, but missed by two cents in this quarter year over year.
European markets settled higher across the board following better-than-expected economic news out of Germany.
The Belgium20 jumped 1.4% and Germany’s DAX 30 was higher by 0.6%. France’s CAC 40 advanced 0.5% while the Stoxx 600 and UK’s FTSE 100 edged up 0.1%.
German-made goods rose 4.5% in August, boosting hopes for a robust third quarter.
Asian markets showed strength with China’s Shanghai closed for a holiday and the rest of the week.
Hong Kong’s Hang Seng rose 0.9% and Japan’s Nikkei gained 0.5%. Australia’s S&P/ASX 200 added 0.4% and South Korea’s Kospi climbed 0.3%
The U.S. trade deficit widened 5.9% to -$67.1 billion in August, in line with expectations, after surging 18.9% to -$63.4 billion in July. Exports rose 2.2% to $171.9 billion and imports were up 3.2% to $239 billion. Excluding petroleum, the deficit expanded to -$68.6 billion from -$65.4 billion. The real August goods balance widened to -$92.3 billion versus July’s -$91.1 billion.
Chain store sales increased 2.1% year-over-year in the week ending October 3 versus the same week a year ago. The monthly 12-month pace rallied to a 0.9% year-over-year clip, versus 0.6% previously. The month-over-month numbers were flat versus -0.3% previously.
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) rebounded despite tapping a morning low of $158.68. Prior and upper support from mid-June at $159-$158.50 was breached but held. A close below the latter and the 200-day moving average would suggest additional weakness towards $157.50-$157.
Lower resistance at $161-$161.50 was cleared but held on the bounce to $161.40 afterwards.
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) was up for the sixth straight session after trading to an intraday high of 30. Lower resistance at 29.50-30 was cleared but held. A close above the latter and the 200-day moving average would be a bearish signal for the stock market with upside risk towards 32-32.50.
Support remains at 27-26.50 followed by 25.50-25 and the 50-day moving average.
The Wilshire 5000 Composite Index (NYSE: WLSH) was down for the second time in three sessions despite tagging an intraday high of 35,405. Prior and lower resistance from early September at 35,250-35,500 was breached but held.
The fade to 34,615 failed to hold upper support at 34,750-34,500. A close below the latter and the 50-day moving average would indicate additional weakness towards 34,250-34,000.
The Consumer Discretionary Select Spiders (NYSEArca: XLY) tested an afternoon low of $147.21. Near-term and upper support is at $147.50-$147 was tripped and failed to hold. A close below the latter would reopen downside risk towards $146-$145.50.
Lowered resistance at $149-$149.50 followed by $151-$151.50.
RSI is back in a downtrend after failing to hold upper support at 55-50. A close below the latter would suggest additional weakness towards 45-40 and levels from mid-September. Resistance is at 60.
Check back after the closing bell each day for the most important news and numbers in the WealthPress stock market update.