In a note to investors commenting on the Housing Price Index and today’s trading Gorilla Trades strategist Ken Berman said:
Q1 2020 hedge fund letters, conferences and more
The major indices are all trading in the red at midday following a sharp overnight drop in risk assets. The spike in the number of new COVID cases in the U.S. and globally together with the fears of another trade skirmish between the U.S. and the European Union (EU) triggered the selloff, affecting all of the key asset classes. The Trump administration announced a plan to increase tariffs of some European agricultural and industrial goods by over $3 billion, which could reignite the debate between the two sides and add to the worries concerning global trade.
Housing Price Index Increases The Selling Pressure On The Real Estate Sector
In economic news, the Housing Price Index (HPI) came in at 0.2%, a tad below expected, increasing the selling pressure on the real estate sector, which has been the worst-performing sector this week. Crude oil inventories The German IFO sentiment number was higher-than-expected, but that wasn’t enough to stabilize European markets, amid the fading reopening optimism. Stocks are on track for their worst session in almost two weeks, but from a technical perspective, today’s losses are not yet significant, although he continued weakness of the cyclical sectors is troubling.
Market Wrap
Dow: 25,409, - 747 or 2.9%
S&P 500: 3,046, - 86 or 2.7%
Nasdaq: 9,892, - 239 or 2.4%
Russell 2000: 1,388, - 50 or 3.5%
Market breadth has been relatively weak amid the broad risk-off shift, with decliners outnumbering advancing issues by a more than 15-to-1 ratio on the NYSE. Only 8 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 28 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. The key cyclical sectors all got hit hard this morning together with the most lockdown-sensitive issues, and while tech stocks have been showing relative strength again, together with the traditionally defensive sectors, the vast majority of stocks are sporting losses at midday. Stay tuned!
