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Stock Market News for Sep 18, 2020

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U.S. stock markets closed lower on Thursday as technology sector selloff continued. Fed's ultra-dovish monetary stance has failed to boost investors' confidence. Moreover, delay in second round of fiscal stimulus, conflicting news on COVID-19 treatments and weak economic data dented market participants morale. All the three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) dropped 0.4% or 130.40 points to close at 27,901.98, reversing its fourth positive session in a row. Notably, 13 components of the 30-stock index ended in the green while 17 finished in red. The blue-chip index is 2.2% below to become green year to date.

The S&P 500 declined 0.8% to end at 3,357.01, marking second successive day of loss. The Real Estate Select Sector SPDR (XLRE), the Communication Services Select Sector SPDR (XLC) and the Consumer Discretionary Select Sector SPDR (XLY) tumbled 2.2% 1.8% and 1.4%, respectively. Notably, eight out of the eleven sectors of the benchmark index closed in negative territory and three in positive zone.

Meanwhile, the tech-laden Nasdaq Composite finished at 10,910.28, shedding 1.3% or 140.19 points due to the poor showing by technology behemoths, marking two-day losing streak.

Shares of technology behemoths such as Apple Inc. (AAPL - Free Report) , Amazon.com Inc. (AMZN - Free Report) , Netflix Inc. (NFLX - Free Report) , Facebook Inc. (FB - Free Report) and Alphabet Inc. (GOOGL - Free Report) declined 1.6%, 2.3%, 2.8%, 3.3% and 1.7%, respectively. Apple carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) was up 1.6% to 26.46. A total of 9.70 billion shares were traded on Thursday, higher than the last 20-session average of 9.47 billion. Decliners outnumbered advancers on the NYSE by a 1.61-to-1 ratio. On Nasdaq, a 1.36-to-1 ratio favored declining issues.

Fed Failed to Boost Investors' Morale

The Fed has provided a grim outlook for the U.S. economy in 2020 which was the primary driver to pursue an ultra-dovish monetary stance. Although the continuation of the zero or near-zero benchmark interest rate least up to 2023 will be a long-term positive for the market, the Fed Chairman Jerome Powell also said "overall activity remains well below its level before the pandemic and the path ahead remains highly uncertain."

Delay in Fiscal Stimulus

A delay in the second round of fiscal stimulus has started showing its effects in economic data like job data, retail sales, housing data and consumer confidence. Market participants are concerned that the pace of the economic recovery might have lost momentum. On Sep 17, President Donald Trump has supported a $1.5 trillion stimulus package unveiled by a bipartisan group of 50 House lawmakers — 25 from each party. However, the Congress is yet to take any decision on the new proposal.

Conflicting News on COVID-19 Treatment Front

Conflicting news are appearing on the coronavirus treatment front. On Sep 16, President Trump said that his administration is planning to distribute vaccine for COVID-19 since mid-October or a little later. However, earlier that day, Dr. Robert Redfield, the Director of Centers for Disease Control and Prevention told Congress under oath that a vaccine may not be available to the general public until next year.

Economic Data

The Department of Labor reported that weekly jobless claims declined by 33,000 to 860,000 for the week ended Sep 12. The consensus estimate was 852,000 and previous week's data revised upward to 893,000 from 884,000 reported earlier. However, the unadjusted initial jobless claims came in at 790,021 compared with 865,995 in the previous week. It was the seventh straight week in which unadjusted claims stayed below 1 million.

Continuing claims (people who are already receiving benefits) declined to 12.628 million for the week ended Sep 5 from 13.544 million in the prior week. Unadjusted continuing claims dropped to 12.321 million from 13.355 million in the prior week. The four-week moving average for continuing claims dropped by 532,750 to 13.5 million.

The Department of Commerce reported that housing starts dropped 5.1% to a seasonally adjusted annual rate of 1.416 million units in August, lower-than the consensus estimate of 1.469 million units. July's data was revised downward from 1.492 million units from 1.496 million units.

Building Permit fell 0.9% to a seasonally adjusted annual rate of 1.470 million units in August, lower-than the consensus estimate of 1.535 million units. July's data was revised downward from 1.483 million units from 1.495 million units.

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