Note: Our daily “S&P 500 Outlook, Forecast, and Trading plan for Wednesday, 11/21” will be posted around 8:30am EDT, Wednesday.
THE GIST (“THE WHAT”)
Extending losses, the index gave up its year-to-date gains amid a major technology sell-off. Disappointing earnings and gloomier outlook by Target Corp., Kohl’s Corp. and L Brands Inc. renewed concerns of earnings slowdown, spooking the already anxious investors away from riskier equity assets to safe-haven bonds.
Oil prices fell sharply to fall into a bear market, further fueling the day’s steep losses. Gapping significantly lower at the open, all of the eleven primary sectors were broadly sold off, closing at 2641.89, down sharply by 48.84 points and losing 1.82% over previous session’s close.
THE DETAILS (The “How & Why”):
Energy sector led today’s broad-based sell-off, down sharply by 3.29%. Oil prices plummeted 6.8% on concerns of global oversupply, sparking a dramatic selling of energy stocks. All of the components within the sector traded lower, led by Newfield Exploration Co., Devon Energy Corp. and Marathon Oil Corp., down 8.49%, 7.36% and 6.68% respectively.
Apple Inc. led the Tech-wreak once again, shedding another 4.78% following stock downgrade by Goldman Sachs, citing fading demand for its newest iPhones. Technology and Communication Services sectors shed 2.14% and 1.26%. The once beloved FAANG stocks all entered into an official bear market amid concerns of slowing growth and rising governmental regulations.
Interestingly, semiconductor stocks helped limit losses within the sector, rebounding from their previous session’s steep declines. Analog Devices Inc., Applied Materials Inc. and NVIDIA Corp. outperformed by 4.09%, 3.92% and 3.03% respectively.
Retail and department stocks were amongst the worst decliners of the session ahead of the holiday shopping season, leading the Consumer Discretionary sector lower by 2.18%. Disappointing quarterly earnings reports by L Brands Inc., Target Corp. and Kohl’s Corp. sparked a riot in departmental chain stocks, plunging 17.71%, 10.52% and 9.23%, respectively.
Looming threats of a trade war between the U.S and China, coupled with the concerns of a possible global economic slowdown also weighed down on Industrials and Materials sectors to shed 2.10% and 1.86%. Treasury yields fell across the board as investors flocked to safe-haven bonds amid turmoil in equity markets, weighing down on the Financials stocks.
The broader Financials sector closed the session lower by 2.09%. Defensive sectors were also sold-off in today’s risk-off session, albeit faring better that other sectors. Real Estate, Health Care and Utilities were down 1.35%, 0.97% and 0.51% respectively.