The Nasdaq on Thursday afternoon turned sharply lower. The Nasdaq Composite Index COMP, -0.63% was most recently down 72 points, or 1.1%, as the index was jolted suddenly lower, with some investors and traders citing a combination of concerns about valuations and market participants taking some money off the table following a brisk run for the high-flying sector. The abrupt retreat for the tech-centric gauge came as the other main equity benchmarks pared an earlier advance. All three equity gauges notched all-time intraday trading highs at the open, but the S&P 500 index SPX, -0.10% was most recently down 0.5% at 2,464 and the Dow Jones Industrial Average DJIA, +0.39% traded flat at 21,710, buoyed by gains in Verizon Communication VZ, +7.68% while Dow component and tech-giant Apple Inc. AAPL, -0.83% sold off by 2.7%, cutting about 30 points from the blue-chip gauge. The popular tech-focused exchange-traded fund, the Technology Select Sector SPDR ETF XLK, -0.38% was trading down 1% in recent trade.
The Dow Jones Industrial Average closed at a record on Thursday driven by earnings-fueled gains in Verizon and Boeing, but the broader market finished in negative territory due to a firm slump in technology stocks.
The Dow DJIA, +0.39% ended 85.54 points, or 0.4%, higher at 21,796.55, powered by a rally in shares of Boeing Co. and Verizon Communications Inc. VZ, +7.68%
Technology-weighted indexes, however took a beating.
The Nasdaq Composite Index COMP, -0.63% closed 40 points, or 0.6% to 6,382, but off its worst levels. At its intraday low during the midday pullback, the Nasdaq was down 104 points, or 1.6%, before paring that steep drop. Apple Inc. AAPL, -1.89% shares weighed on the index with a 1.9% decline.
The S&P 500 index SPX, -0.10% ended off 2.41 points, or 0.1%, to 2,475.42, weighed by those technology declines, health-care and industrials. Gains in telecoms, energy, the consumer sectors, helped to moderatrwe the broad-market gauge’s decline
Facebook is one of the so-called FAANG stocks, a reference to the quintet of technology and internet names (Facebook, Apple, Amazon AMZN, -2.77% Netflix NFLX, -3.38% and Google-parent Alphabet Inc. GOOG, -1.45% GOOGL, -0.68% that have powered market returns thus far this year. However, those sharp gains have also raised questions over valuations.
“After Facebook earnings, people are getting jittery about valuations so there’s a rebalancing going on,” said Diane Jaffee, senior portfolio manager at TCW. Jaffee said the broad weight upon tech stocks, as shown by the drop in Apple, was likely driven by exchange-traded funds.
A drop in the Dow Jones Transportation Average DJT, -3.11% which was down 3.6%, also offered a warning signal for an equities pullback.
“There has been a marked divergence between Dow Transports and Dow Industrials and whenever this happens people like to reduce risk,” said Ian Winer, head of the equities division at Wedbush Securities. “And the best way to reduce risk right now is by selling overvalued tech stocks.”
Other markets: European stocks SXXP, -1.09% traded mixed as investors absorbed a heavy stream of earnings, while in Asia ADOW, -0.77% equity markets were broadly positive.
Gold prices GCQ7, -0.12% settled up 0.9% at $1,260 an ounce, with precious and base metals rising across the board, while oil prices CLU7, +0.08% rose 0.6% at settle at $49.04 a barrel.
The Nasdaq Composite Index has seen a choppy month, tumbling alongside a sharp selloff in the technology sector—by far the biggest weight in the index—but a subsequent bounce has brought it to a crucial technical crossroads.
According to Bespoke Investment Group, the Nasdaq COMP, +0.61% —on track for its fourth straight positive session—“is hovering just under the downtrend” that has been in place since early June, when it last hit a record.
“If it can continue to rally above that trendline, it would be a bullish sign, but a second lower high here would really weaken the picture in the short-term,” the firm wrote in a blog post.
The trendline, based on the downward slope from the peak in early June and another high hit later in the month, is currently around 6,265, based on FactSet data. That’s roughly 0.3% above the Nasdaq’s current level of 6,245.
In contrast, the Nasdaq 100 NDX, +0.77% —which has a higher concentration to the large-cap technology and internet stocks that drove the decline—has seen a similar pattern.
“Like the Nasdaq, it has also rebounded decently from those lows. That said, it still has a bit more wood to chop on the upside before that newly formed downtrend comes into play.”
The trendline for the Nasdaq 100 is around 5,789, or 0.6% below current levels.
The Nasdaq Composite Index fell as much as 4.1% between its early June peak and a low hit on July 7. At current levels, it is up 16% on the year.
Yesterday’s Globex session was fairly uneventful. The ESU was held to just a 6 handle range, with only 144k contracts traded. Going into the 8:30am CT cash open, stocks index futures were all trading right around the Wednesday’s settlements. When the bell rang, the S&P 500 futures (ESU17:CME) opened up at 2441.75, up +1.75 handles, and the Nasdaq 100 futures (NQU17:CME) opened at 5786.75, up +1.00 point.
As Janet Yellen came out for day 2 of her testimony to Congress, the ES did a sort of ‘head fake’, first trading up to 2445.00, then turning lower down to 2439.00, which would eventually be the low print for the day. The NQ duplicated this pattern with a move up to 5808.50, then a break down to 5772.25, also the low of the day.
Once the lows were in, the futures began a slow grind higher, eventually testing the overnight globex highs, but unable to breach them. Once the highs were tested, the ES fell asleep, and floated in a 4 handle range for the rest of the session.
In the end, the S&P 500 futures (ESU17:CME) settled at 2445.50, up +5.50 handles, or +0.22%, the Dow Jones futures (YMU17:CBT) settled at 21509, up +26 points, or +0.12%, and the Nasdaq 100 futures (NQU17:CME) settled at 5797.50, up +11.75 points, or +0.20%.
Overnight, equity markets in Asia traded mostly higher, led by the Singapore Exchange, which closed up 1.6%. Meanwhile, in Europe, most markets are trading higher this morning, however, the gains are marginal.
In the U.S., the S&P 500 futures followed the same overnight pattern we’ve seen all week; low volume and a tight 5 handle range. The ESU opened the globex session at 2446.50, a high of 2447.25 was made at 10:00pm CT last night, and the low at 2442.00 was made at around 4:30am CT. The ES has since recovered from the lows, and as of 6:30am, the last print is 2444.50, down -1.00 handle, with 75k contracts traded.
In Asia, 9 out of 11 markets closed higher (Shanghai +0.13%), and in Europe 9 out of 12 markets are trading higher this morning (FTSE -0.19%). Today’s economic calendar includes Consumer Price Index, Retail Sales, Industrial Production, Robert Kaplan Speaks, Business Inventories, Consumer Sentiment, and the Baker-Hughes Rig Count.
Selling the September S&P 500 futures contract on or about July 17 and holding until on or about July 26 has a 60% success rate registering 21 wins against 14 losses in the last 35 years. The best win was $19,150 in 2002, and the worst loss was in 2009, posting a $12,650 bereavement. This trade had been successful in 13 of 15 years from 1990 to 2004. However since then it has nearly the opposite record, posting losses in 9 of 12 years from 2005-2016.
The PitBull always talks about ‘mid-month’ money going into the stock market on the 14th or 15th of the month, so we went back over the last 8 months. According to the stats we pulled, the 14th of the month was higher only 3 out of 7 occasions, but 2 of those 3 were up less than a 1 handle, and the 15th of the month closed higher 7 times out of 8.
Our view is the same as yesterday. This rally is not over yet. A new high is going to be made before a 25 handle pullback, and we are looking to buy a small early pullback today.
The Dow on Thursday closed at a record for the 24th time in 2017, as gains in the financial sector helped the broader market book modest gains ahead of a roster of corporate results from the U.S.’s biggest banks.
The Dow Jones Industrial Average DJIA, +0.39% rose 20.95 points, or 0.1%, to close at 21,553.09. The S&P 500 index SPX, +0.47% gained 4.58 points, or 0.2%, to end at 2,447.83. The rise by the broad-market index was supported by a 0.6% climb by financials—the best performer among the index’s 11 sectors.
Meanwhile, the Nasdaq Composite Index COMP, +0.61% finished up 13.27 points, or 0.2%, at 6,274.44, marking the tech-heavy gauge’s fifth straight finish in the green.
Another bright spot for the market was the beleaguered retail sector, with one popular way to invest in the sector, the SPDR S&P Retail ETF XRT, -0.18% posting its best daily climb of the year with a gain of 2.3%. The move was paced by a 8.6% surge in shares of Camping World Holdings Inc. CWH, -1.24% and J.C. Penney Co. Inc. JCP, -0.80% up 7.8%.
The retail resurgence was underpinned by Target Corp. TGT, -0.15% which said it now expects a surprise “modest increase” in same-store sales for the fiscal second quarter, citing improved traffic and sales trends. Its stock climbed 4.8%.
Thursday trading action came as Federal Reserve Chairwoman Janet Yellen delivered a second day of testimony on Capitol Hill, reiterating dovish comments that appeared to bolster investor confidence on Wednesday.
Some investors pocketed profits in response to the strong gains in Wednesday’s session but the market was relatively quiet, according to Paul Nolte, portfolio manager at Kingsview Asset Management.
In other Fed news, Dallas Fed President Rob Kaplan, in an essay, said he wants to see further evidence of a recovery in inflation before considering another rate increase.
Wall Street is expecting corporate results from Wells Fargo & Co. WFC, -1.10% Citigroup Inc. C, -0.45% and Dow component J.P. Morgan Chase & Co. JPM, -0.91% which will be used to partially to gauge the health of the economy. Bank earnings also set the early tone for the start of second-quarter earnings season.
A prolonged bout of market quietude, which weighed on trading volumes, is expected to hurt bank revenues, as well as persistently low yields despite the Fed’s tightening efforts. Higher yields and more active trading are bullish for the banking sector.
Thursday’s rise for the sector XLF, -0.44% may also suggest that investors are betting that the industry can outperform these lowered expectations.
Oil blues: Oil prices CLQ7, +0.24% recovered from an earlier drop to settle higher. The International Energy Agency said global oil supply in June rose by 720,000 barrels to 97.46 million a day, boosted by both higher production from OPEC and non-OPEC producers such as the U.S.
Stock movers: Shares of Nvidia Corp. NVDA, +2.69% dropped 1.2% after surging to a record close on Wednesday on the back of an upgrade at SunTrust.
Delta Air Lines Inc. DAL, +1.16% reported second-quarter earnings that missed expectations, although revenue rose. Shares fell 1.8%.
Snap Inc. SNAP, -2.68% surged 3% after Stifel Nicolaus upgraded the Snapchat parent to buy, saying that a recent selloff in the stock had created a “compelling” opportunity.
U.S.-listed shares of Novartis AG NVS, +0.74% fell 0.8% despite a Food and Drug Administration advisory panel late Wednesday unanimously recommended the agency approve one of its cancer drugs.
NRG Energy Inc. NRG, +4.68% jumped 5.3%, extending its climb on Wednesday, which was its best-ever one-day percentage gain.
Tiffany & Co. TIF, -2.28% rose 1.7% after it named Alessandro Bogliolo as its new chief executive, effective Oct. 2.
Other markets: Asian stocks HSI, +0.57% closed mostly higher, while European equities SXXP, +0.18% added to their Yellen-fueled gains.
Most metals fell with gold GCQ7, +0.14% finishing weaker while the ICE Dollar Index DXY, +0.08% was mostly unchanged.
U.S. stocks closed modestly higher Friday after trimming gains in the last few minutes of the session. However, steep losses in technology and health-care stocks earlier in the week resulted in poor weekly and mixed monthly performances for all three benchmarks.
Next week, equity trading will be shortened by the Independence Day holiday on Tuesday.
The S&P 500 SPX, +0.15% rose 3.71 points, or 0.2%, to 2,423.41, with six of the 11 main sectors closing higher. The index ended the week with a 0.6% loss, but still booked a 0.5% monthly and 2.6% quarterly gain. For the first half of the year, the index rose 8.2%.
“The market has been resilient in the face of realization that perhaps no fiscal stimulus is forthcoming this year. This means that impressive gains in the S&P 500 this year were not about Trump or the tax cuts, but about underlying fundamentals and the economy,” said Mike Antonelli, equity sales trader at Robert W. Baird & Co.
The Dow Jones Industrial Average DJIA, +0.29% added 62.60 points, or 0.3%, to 21,349.63, buoyed in part by a jump in shares of Nike Inc., which rallied 11%, its best one-day percentage gain since September 2014.
The index ended the week roughly 0.2% lower, but booked hefty monthly and quarterly gains, at 1.6% and 3.3%, respectively. The index ended the first half of the year 8% higher.
Meanwhile, the Nasdaq Composite Index COMP, -0.06% failed to hold on to earlier gains, ending 3.92 points, or less than 0.1%, lower at 6,140.42. The index ended the week 2% lower and booked a 0.9% monthly loss, thanks to recent selloffs in technology stocks. Still, Nasdaq Composite is up 3.9% over the past quarter and up 14.1% since the start of the year, its best half-year performance since 2009.
In data, spending in May was barely higher, as Americans chose to save more money instead. Meanwhile, consumer inflation also slowed, conflicting with the Federal Reserve’s assessment of transitory sluggishness in prices.
Consumer spending rose 0.1% last month after back-to-back 0.4% gains in April and March, matching expectations by economists polled by MarketWatch.
The PCE index, the Federal Reserve’s preferred inflation gauge, fell 0.1% to mark the second decline in three months. Expectations for a 0.1% increase.
The Chicago business barometer, or Chicago PMI, for June came in at 65.7, above the consensus reading of 58.0. A reading of at least 50 indicates growth.
The University of Michigan’s final June update on consumer sentiment for the month was at 95.1, compared with the Wall Street consensus estimate of 94.5.
Stocks in focus: Nike shares sprang up 11% after the sportswear giant late Thursday posted better-than-expected quarterly profit and sales. Nike also confirmed a deal to sell shoes through Amazon.com Inc. AMZN, -0.81%
Shares of home builders attracted buyers, pushing up prices sharply. D.R. Horton Inc DHI, +2.31% was up 2.2%, while PulteGroup Inc. PHM, +1.95% gained 2%.
Bank of America Corp. BAC, -0.25% declined 0.3% even after Warren Buffett’s Berkshire Hathaway Inc. BRK.B, +0.04% said it would exercise warrants to buy 700 million shares of the bank’s common stock when the lender’s dividend increase goes into effect.
Other markets: The ICE Dollar Index DXY, +0.13% which measures the buck against a basket of six currencies, was flat at 95.654, while gold GCQ7, -0.35% slipped 0.3%.
Asian stocks NIK, +0.19% HSI, +0.07% dropped sharply as the central bank-spurred bond selloff spread to the region. European stocks SXXP, -0.34% gave up earlier gains to end lower.
U.S. oil futures CLQ7, +0.30% rallied Friday to register a seventh straight session gain, settling 2.5% higher above $46 a barrel. The yield on the 10-year Treasury note rose 3 basis points to 2.3%, the highest level since May 16.
The Nasdaq Composite Index marked its best first half of the year since 2009, despite closing out 2017’s midpoint with its worst monthly performance since October.
The tech-laden Nasdaq COMP, -0.06% notched a first-half rise of 14.1%, which would represent the best rally to a year’s halfway mark since the index surged an eye-bulging 43.9% in 2009, according to WSJ Market Data Group. During its stretch, the benchmark logged 38 all-time closing highs—the most at the half since 1986 when 52 record closes were tallied.
However, the Nasdaq’s outlook is in question after a week that sees it pacing a roughly 2% drop and 0.9% slide in June, which marks its first monthly loss since a 2.3% fall last October, according to FactSet data.
The painful and whipsawing period began for the Nasdaq on June 9, a day after it booked its most recent all-time high, amid concerns about the lofty valuations of tech’s biggest names, including Facebook Inc. FB, -0.04% Apple Inc. AAPL, +0.24% Amazon.com Inc. AMZN, -0.81% Netflix Inc. NFLX, -0.45% and Google-parent Alphabet, collectively known in the parlance of market analysts as FAANG, with some including Microsoft Corp. MSFT, +0.64%
Among the other major U.S. equity benchmarks, the Dow Jones Industrial Average DJIA, +0.29% and the S&P 500 index SPX, +0.15% logged the best performances in the first half since 2013. The Dow climbed 8%, while the S&P 500 rang up a 8.2% return, powered primarily by the tech sector, 16.4%, the best performing group among the S&P 500’s 11 sectors. The tech-focused Technology Select Sector SPDR ETF XLK, -0.09% which tracks some of the big tech names, but excludes companies like Amazon (listed in the consumer-discretionary sector on the S&P), rose 13.3%.
Tech boasts the biggest weighting on the S&P 500 by far, at about 23%. In other words, that sector tends to hold the most sway in moves in the capitalization weighted, broad-market benchmark. By comparison, the equal-weighted S&P Equal Weight Index SPXEW, +0.29% which confers equal weights to all companies in the S&P 500, is up 7.1% to the first six months of 2017.
For the more closely followed S&P 500, technology moves deserve close attention as investors look at 2017’s coming six-month stretch.