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THE GIST (“THE WHAT”)
Driven by political headlines and renewed concern of economic slowdown, the S&P 500 logged its most volatile session of the month. President Trump criticized China’s trade practices while threatening to double down on Iranian sanctions in his speech at the UN General Assembly, dampening the trade optimism that the markets were riding on.
Political headlines around Trump’s impeachment further weighed down on investor confidence. The index, however, closed off of session lows at 2966.60, down 25.18 points and losing 0.84% over previous session’s close. Nine out of the eleven primary sectors closed lower in the most volatile session of the month, with Energy and Communication Services sectors leading the declines.
THE DETAILS (The “How & Why”):
A sharp decline in Consumer Confidence index for the month of September fueled the demand for safe-haven assets. Meanwhile, at the closely watched general assembly of the United Nations, President Trump intensified his trade rhetoric by criticizing China of manipulating its currency and stealing the intellectual property. He also threatened to double down on sanctions against Iran.
Investors continued buying into bond assets amid renewed economic slowdown jitters and intensifying trade rhetoric, pushing the Treasury yields to their 2-week lows. Markets also closely monitored political drama around Trump’s impeachment after the House Democrats accused him of violating the U.S. constitution after he pressured the Ukrainian president to investigate business dealing of former U.S. Vice President and Democratic presidential candidate Joe Biden and his son Hunter Biden.
Trimming losses mid-session after Trump authorized the release of the transcript of his call with Ukrainian President, the index, however pulled back after House Speaker Nancy Pelosi announced the formal impeachment inquiry.
Energy stocks posted the worst declines of the session, down 1.63% alongside slumping oil prices. Marathon Oil Corp., Helmerich & Payne Inc. and Halliburton Co. were the worst performers of the session, tumbling 6.72%, 5.93% and 5.43%, respectively. Communication Services, Consumer Discretionary and Technology were among the other major drag on the index, all closing more than 1% lower. Financials, Materials, Health Care and Industrials all added to the day’s declines.
Netflix Inc. led the FANG stocks lower, falling for the fifth session in a row by 4.26% following stock downgrade by several analysts amid intensifying competition in video-streaming business. Facebook Inc. and Amazon.com Inc. also fell more than 2% apiece.
Falling yields, on the other hand, continue boosting demand for dividend-paying and defense-play stocks. Utilities posted the biggest percentage gain of 1.06% in today’s risk-off session, limiting the losses within the broader index. Consumer Staples also managed to post 0.23% gain.