In a note commenting on the selling pressure this morning and today’s trading Gorilla Trades strategist Ken Berman said:
The major indices are all significantly lower at midday as yesterday's global risk-off shift spread to Wall Street in earnest this morning. The Dow and the S&P 500 have been hit especially hard due to the resurfacing global economic worries and the fears of a wave of secondary COVID-19 outbreaks, and the key cyclical sectors and small-caps suffered another major hit. Fed Chair Jerome Powell’s bleak outlook led to a large drop in Treasury yields, with the long end of the curve, in particular reversing its recent increase.
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High Number Of Continuing Jobless Claims Added To The Selling Pressure
In economic news, the Producer Price Index (PPI) was well above both the consensus estimate and last month’s reading, coming in at 0.4%, while the core PPI was declined by 0.1%, the report suggests a rebound in demand. The weekly number of new jobless claims was slightly better-than-expected at 1.54 million, but the number of continuing claims remains very high, which added to the selling pressure this morning. Italian industrial production beat the consensus in pre-market trading, but that wasn’t enough to lift risk assets and European equities remain among the weakest globally.
Dow: 25,955, - 1035 or 3.8%
S&P 500: 3,087, - 22 or 3.2%
Nasdaq: 9,944, - 248 or 2.5%
Russell 2000: 1,394, - 73 or 5.0%
Market breadth has been weak again this morning, confirming the broad selloff, with decliners outnumbering advancing issues by an over 15-to-1 ratio on the NYSE. Only 3 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 11 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure a mixed and choppy afternoon session. The energy, real estate, and financial sectors have been the weakest this morning but industrials and materials have also been struggling, while the traditionally defensive issues and tech stocks held up relatively well, in line with the weekly trend. Stay tuned!