THE GIST (“THE WHAT”)
Gapping lower at the open following last two day’s intense sell-off, the S&P 500 index extended losses amid growing prospects of interest rates staying higher for longer. The sell-off gained momentum in the final hour of the session as the index gave up its 100 DMA and closed near day’s lows at 4330, down 72.20 (-1.64%) over previous session. Real estate stocks were the biggest drag on the broader index alongside surging yields.
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Trading Plans for THU. 09/21 – Market Bull Goldilocks No More
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THE DETAILS (The “How & Why”):
Nervous investors sold-off equities across sectors amid increasing prospects of interest rates staying higher for longer. Valuation concerns sparked a sell-off in mega-cap technology stocks as yields surged following Wednesday’s FOMC policy decision of keeping interest rate unchanged, while signaling one more rate hike of 25 basis point this year. The median forecast for Fed’s fund rate by the end of this year rose from 4.6% to 5.1%. The 10-year treasury yield hit its highest level since October 2007 to settle at 4.492%.
Real estate stocks were the biggest drag on the broader index. In economic news, U.S. Aug existing home sales fell unexpectedly by 0.7% month-on-month to a seven-month low, as against the expectation of a 0.7% month-on-month increase, fueling losses in homebuilder stocks. Alexandria Real Estate Equities Inc tumbled 8.29% to be worst decliner of the session, followed by more than 5% decline in Boston Properties Inc and Prologis Inc.
Semiconductor stocks led the technology space lower. Adobe, Advanced Micro Devices, and Intuit Inc shed more than 3% each. Broadcom Inc fell 2.7% following reports that the executives at Alphabet are considering ditching the chipmaker as its supplier of AI chips. Bucking the day’s trend, FedEx Corp jumped 4.5% on the back of stronger-than-expected quarterly results and a raised full-year profit outlook.