Stocks fell Friday after a selloff a day earlier led the S&P 500 to its worst single-session drop in nearly three months. Shocking! Your gains would be impressive. And they may not be over. Risk aversion isn’t push down yields, just the opposite
For the past decade, if you were to send equities down 3% you can almost guarantee that Treasury yields would be lower.
By Adam Button The August jobs report beat expectations, and more people are adopting a “saver” mindset. Plus how to put Thursday’s stock market losses into perspective.
Stocks fell Friday, extending declines after a selloff a day earlier led the S&P 500 to its worst single-session drop in nearly three months.
While ending the day off the lows of the session, each of the three major indices posted steep declines for the week, as Thursday’s rout took out gains from earlier sessions this week. The S&P 500 ended the week 2.3% lower, the Dow fell 1.8% and the Nasdaq dropped nearly 4% for its worst week since March.
The Nasdaq underperformed especially on the day, falling as much as 5% intraday Friday before paring losses, as tech stocks continued to lag. The index on Thursday had dipped back below 12,000, after crossing that threshold for the first time every just a day earlier. Apple (AAPL) shares steadied after an 8% drop on Thursday. Amazon (AMZN) and Zoom Video Communications (ZM) – both darlings of the “stay at home” trade in recent months – extended losses from Thursday.
“Thursday’s mini-crash left the door open for more selling, and investors have rushed through it today in a hurry to take profits before more downside arrives,” Chris Beauchamp, chief market analyst at IG, said in a note. “If there is to be a crash, then the end of the first week in September, following non-farms and ahead of a long weekend in the US, is probably the perfect time to do it.”
Over the past couple months, a number of market pundits had warned of frothiness in the markets and crowding in tech stocks especially, as investors sought haven in software stocks during the pandemic.
“A sudden sell-off in tech may raise some red flags, but sector rotation is a good thing,” Rick Swope, senior director of investor education for E-Trade Financial Corporation, said in an email Thursday. “While adding breadth to the market, dedicated traders may benefit from seeking opportunities outside of overbought names.”
Thursday’s plunge came in absence of a clear external catalyst, with newly released data on weekly jobless claims in fact topping expectations Thursday morning, and developments around a coronavirus vaccine candidate coming in increasingly constructively. Friday’s August jobs report from the US Labor Department showed better than expected but moderating gains in net payrolls relative to earlier months in the summer. It also showed the first unemployment rate below 10% since March.
“Most signs still point to an economic recovery. But there are a lot of obstacles between now and the end of the year: Stimulus uncertainty, budget negotiations, presidential debates, corporate conferences, and the election,” said Lindsey Bell, Chief Investment Strategist for Ally Invest. “The next few months could be a bumpy ride.”
Some of the more downtrodden names for the year to date so far managed to stay in positive territory during Thursday’s session, or at least averted the worst of Thursday’s drop. While all 12 sectors in the S&P 500 were down on the day, the energy, utilities and financials sectors outperformed, falling no more than 1.6% each. Shares of Carnival Corporation (CCL) rose 5% and added to gains on Friday, after the company said it would be resuming some cruise operations under its Costa brand this weekend, with the announcement bringing some other peer cruise and travel stocks higher in sympathy.
The three major indices closed out Friday’s session lower, but at least clawed back from session lows during intraday trading.
Here’s where the three major indices settled at the close of regular equity trading:
S&P 500 (^GSPC): -28.2 points (-0.82%) to 3,426.86
Dow (^DJI): -159.48 points (-0.56%) to 28,133.25
Nasdaq (^IXIC): -144.97 points (-1.27%) to 11,313.13
The three major indices added to losses intraday Friday, with the Dow extending its losses to more than 500 points, or 1.8%. The Nasdaq slumped 3.6%, or 413 points, while the S&P 500 was down 80 points, or 2.3%. The tech-heavy index was on track to post its worst two-day slide since mid-March, when market volatility peaked during the start of the pandemic in the US.
Shares of Salesforce led declines in the Dow, with the newly inducted component sliding 7% in intraday trading. Apple followed closely thereafter, with shares down 4%.
The three major indices each fell Friday morning, reversing some earlier gains. The Nasdaq sharply underperformed and fell more than 2%, as investors continued to take profits from tech stocks that up until this week had handily outperformed the broader market.
The S&P 500 fell 1%, or about 38 points, while the Dow dropped 84 points, or 0.3%. The financials, industrials and real estate sectors outperformed and held in positive territory in the S&P 500, though the heavily weighed information technology, communication services and consumer discretionary sectors slumped again.
While the August jobs report topped estimates on almost every major metric, a number of economists cautioned that the labor market recovery remains on shaky ground, with the lingering impact of the coronavirus pandemic still threatening the rebound from here.
Here’s what some economists had to say about this morning’s report, according to commentary to Yahoo Finance:
“Net, net, the economy is recovering with a sharp rebound in retail sales and business new orders and the while labor market gains are on a slower path, the job gains are undeniable. The spread of the coronavirus cases to new regions of the country in August and the loss of those $600 weekly unemployment checks at the end of July did not stop companies from bringing back more workers this month after being furloughed during the pandemic earlier this year. The virus is in the driver’s seat controlling the speed of the labor market recovery, and despite the fears of another outbreak later in the fall, businesses are slowly returning to normal and this means the worst of the recession is fading behind us in the rear-view mirror.” – Chris Rupkey, chief financial economist for MUFG Union Bank
“The jobs data today were solid; however, now the real work begins. The next 2-3% of employment gains are going to be very tough because there is no total re-opening in sight. PPP funds are running dry and the impasse in Congress to reauthorize another round for struggling small businesses most affected by the pandemic are recipes for a wave of small business closures, particularly among restaurants and small retailers.” – Jamie Cox, managing partner for Harris Financial Group
“One small negative from today’s report is the impact it may have on fiscal support discussions. With growing signs that US activity is improving and jobs are coming back, there is less pressure on Congress to deliver a new fiscal stimulus package. That will be a mistake. The strength of the economy and labour market rests on just a handful of factors: the release of pent up demand accumulating during lockdown; monetary stimulus; and fiscal stimulus.” – Seemah Shah, chief strategist for Principal Global Investors
“The job market broadly is something like a whirlpool, where beneath the surface there are swift cross currents including job loss. Many of the recent large company announcements regarding furloughs and job cuts have yet to hit, indicating that the economy continues to face challenges in the months to come.” – Mark Hamrick, Bankrate.com senior economic analyst
Here were the main moves in markets, as of 9:32 a.m. ET:
S&P 500 (^GSPC): +10.93 points (+0.32%) to 3,465.99
Dow (^DJI): +148.21 points (+0.52%) to 28,440.94
Nasdaq (^IXIC): +8.1 points (+0.07%) to 11,465.31
Crude (CL=F): -$0.35 (-0.85%) to $41.02 a barrel
Gold (GC=F): -$4.50 (-0.23%) to $1,933.30 per ounce
10-year Treasury (^TNX): +5.5 bps to yield 0.677%
The US economy added back a greater than expected number of payrolls in August and the unemployment rate improved by a larger than anticipated margin, as employers continued to bring back workers as virus-related business disruptions abated. Still, the pace of payroll gains slowed relative to recent months.
Non-farm payrolls rose by 1.371 million in August, topping expectations for 1.35 million. This followed a gain of 1.734 million payrolls in July, which itself was a step down from the record more than 4.7 million jobs added back in June.
A rise in temporary hiring for the 2020 Census helped boost non-farm payrolls in August, with government jobs jumping by 344,000 month-on-month. But in the private sector, nearly ever major industry group in both services and manufacturing added payrolls on net as well.
The overall unemployment rate improved to 8.4% in August for the first reading below 10% since March.
Here were the main moves in markets, as of 7:18 a.m. ET:
S&P 500 futures (ES=F): 3,466.75, up 5.25 points or 0.15%
Dow futures (YM=F): 28,460.00, up 109 points or 0.38%
Nasdaq futures (NQ=F): 11,708.5, down 92 points, or 0.78%
Crude (CL=F): +$0.32 (+0.77%) to $41.69 a barrel
Gold (GC=F): +$7.10 (+0.37%) to $1,944.90 per ounce
10-year Treasury (^TNX): +2.3 bps to yield 0.645%
Here were the main moves in equity markets, as of 6:03 p.m. ET:
S&P 500 futures (ES=F): 3,450.25, down 11.25 points or 0.33%
Dow futures (YM=F): 28,269.00, down 82 points or 0.29%
Nasdaq futures (NQ=F): 11,725.5, down 75 points, or 0.64%
NEW YORK, NEW YORK – MARCH 18: Traders work on the floor of the New York Stock Exchange (NYSE) on March 18, 2020 in New York City. The Dow fell more than 1,200 points today as COVID-19 fears continue to roil world markets. (Photo by Spencer Platt/Getty Images)
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn, and reddit.
Find live stock market quotes and the latest business and finance news
For tutorials and information on investing and trading stocks, check out Cashay
Author: Emily McCormickReporter
NFL trade rumors feature two Eagles players
Philadelphia Eagles cornerbacks Sidney Jones and Rasul Douglas are among players who’ve been “raised in trade talks,” according to NFL insider Albert Breer.
This development will come as a surprise to no one. Jones and/or Douglas appear to be on the outs in Philly as roster cuts loom.
These five Eagles cornerbacks are safe bets to make the 53: Darius Slay, Avonte Maddox, Nickell Robey-Coleman, Cre’Von LeBlanc, and Craig James. It’s possible the Eagles will keep either Jones or Douglas as a sixth but it’s hard to see them going with seven.
Neither Jones nor Douglas are likely to garner much trade value.
Jones has theoretical upside given that he’s 24, he was a 2017 second-round pick, he has experience at multiple positions, and he made some big plays late last season. But he’s also rarely available; he’s played in just 23 out of 54 possible games. Jones struggled in training camp this summer before then missing the majority of practices. Maybe the Eagles can trade him for another team’s disappointing player? Or something meager like a 2022 seventh-round pick? Note that trading or waiving Jones clears $1.3 million in cap space.
Douglas, 25, is playing on the final year of his contract. He’s certainly more durable than Jones with only two missed games through his first three seasons. Douglas also possesses starting experience with 18 starts under his belt. But Douglas lacks versatility and he’s only signed through 2020. He’s prone to getting roasted deep since he’s slow (4.59 speed).
The feeling here is that the Eagles should look to get whatever they can for Jones and keep Douglas for depth. But I think Howie Roseman might talk himself into not giving up on Jones just yet and end up moving on from Douglas instead.
Again, I can’t imagine the Eagles will get much — if anything — in return for either player. Teams know the Eagles might just cut them so it’s not like the Birds have much leverage. Roseman has to hope some team is worried about potentially missing out on claiming Jones or Douglas via waivers.
We won’t have to wait too long to see what happens with cuts due in before 4:00 PM Eastern today.
Stay tuned for more Eagles news and updates by following along with BGN’s EAGLES ROSTER CUTS TRACKER — [CLICK HERE].
Author: Brandon Lee Gowton
If You Invested $10,000 in Moderna During the Coronavirus Market Crash, This Is How Much Money You’d Have Now
Moderna (NASDAQ:MRNA) has been one of the superstars of the coronavirus vaccine race — from a share performance and vaccine development perspective. The biotech company’s shares have soared as it went from first to start human trials to a phase 3 trial in about four months.
Moderna slid as the market crashed in March, but the stock quickly recovered. As they say, timing is everything. Moderna announced the launch of clinical trials for its vaccine candidate a few days after the market’s plunge deepened. The shares then surged 48% over three trading sessions. So, if you had invested $10,000 in Moderna during the crash, how much money would you have now? Let’s take a look.
Image source: Getty Images.
Moderna traded lower than $20 a share in January and February. But the stock began to gain steam in early March — climbing to more than $29 — as it became clear Moderna would be a significant player in the vaccine race. Then came the crash that pulled the stock down to a March low of $21.30.
MRNA data by YCharts
Guess how much Moderna stock is trading for at the time of this writing? More than $63. (And that’s off its high of nearly $95 in July.) If you’d invested $10,000 in the shares at the March low, you would now have $29,547. You would have held on through the positives, such as when the company reported encouraging interim data from its phase 1 trial and announced as much as $2.48 billion in U.S. government funding.
You also would have held on through some of the more difficult moments. When top Moderna executives sold shares after reporting the trial data in May, some investors worried about management’s faith in the company’s programs. The sales were routine transactions, however, arranged to be carried out at a pre-set date. This wasn’t an ominous sign from Moderna’s leaders. If you held on to your Moderna shares, you made the right move.
Another hard time for Moderna came with news reports in early July that the start of the company’s phase 3 trial could be delayed. But Moderna maintained its publicly announced promise to begin the study during that month. It launched on July 27. Though Moderna shares now are down from their July high, holding onto the shares was the right choice if you believe Moderna’s program will make it to the finish line.
So, now, should you stay invested? And if you haven’t yet purchased Moderna shares, is it too late? First, let me preface this by saying only aggressive investors with a tolerance for risk should invest in/hold onto shares of Moderna at this point. The company is clinical stage, meaning it doesn’t have other products on the market to immediately generate revenue if the coronavirus vaccine program fails. (Even if trial data is positive now, anything can happen at any moment during a clinical trial.) The shares are also highly dependent on coronavirus vaccine news.
But if you are an aggressive investor, Moderna still represents opportunity. From a timeline perspective, the company is one of the leaders in the coronavirus vaccine race. Of the 33 programs in clinical studies, Moderna is among the eight involved in phase 3 trials.
When it comes to data, Moderna is also a leader. The biotech recently reported something important — promising early results among older trial participants. Performance in older patients is crucial because the elderly have been the most vulnerable to the coronavirus. In two groups — ages 56 to 70 and 71 and older — neutralizing antibody levels were two to three times higher than those observed in recovered coronavirus patients. Neutralizing antibodies are seen as key because they block infection.
If Moderna doesn’t make it to the finish line first, the shares may suffer in the short term. But that wouldn’t mean all is lost. There will be more than one winner in this vaccine race — as long as trials of various companies are successful. Demand is higher than the supply one vaccine maker is able to offer.
So, if regulators approve Moderna’s vaccine — first or after one of the biotech company’s rivals — more share gains may be on the horizon.
Author: Adria Cimino
The bond market isn’t acting the way it ‘should’
For the past decade, if you were to send equities down 3% you can almost guarantee that Treasury yields would be lower.
Today though, US 10-year yields are 5.7 bps higher to 0.69% while 30s are up 7.1 bps to 1.43%.
The easy answer is that there was a story yesterday in China’s Global Times suggesting Beijing will sell more Treasuries. Alternatively, the drop in unemployment today makes the Fed less likely to surprise in September. Maybe it’s that simple but I’m skeptical.
Conversely, yields were also falling last week even as equities surged. It could just be that bonds were ahead of the curve and that equities after flailing around in an option-fueled speculative frenzy.
Finally, there is a fairly strong bearish seasonal trend in bonds (i.e. higher yields) starting about mid-month in September and running until year-end. That could be coming into play.
Finally, it’s a US long weekend and the moves in bonds could be a simple flow and positioning story. We’re not sure why it’s not an early close in bonds today ahead of the holiday but we’ll take the excitement however we can get it.
Ultimately, there’s no easy answer here but any time correlations breakdown and reverse, it argues for some extra caution.
Unemployment falls, and how to keep calm when the stock market drops: What today’s news means for your money
The unemployment rate is the lowest it’s been since March, and some perspective on Thursday’s rough day in the market. Here’s how the headlines could affect your money:
The major indexes took a turn Thursday after the tech sector suffered its worst losses since March, dragging down the broader market. The S&P fell 3.51% Thursday for its worst day since June, and as of close was down 1.51% for the week.
Stocks continued their decline Friday morning. Just remember that market gains and losses should be viewed through a longer lens. Even with Thursday’s losses, the benchmark index still closed above its pre-pandemic high and was at a level investors last saw in mid-August.
The August jobs report is in, and it’s better than analysts expected. The unemployment rate tumbled from July’s 10.2% down to 8.4% — the lowest it’s been since March.
Nonfarm payrolls increased by 1.37 million. Government hiring accounted for a quarter of those new jobs, and of those, the majority were Census roles. Retail hiring was also on the rise.
More than half, 60%, of people now classify themselves as “savers” rather than “spenders,” up from 54% last year, according to a new CNBC + Acorns Invest in You survey. One easy way to shift to a saver mindset? Set up automatic contributions to a savings account from each paycheck, to “pay yourself first.”
Author: Euny Hong