Energy and Mega Cap Tech Continue Market Sell-off

Market Recap Week ending 9/11/2020

The markets continued their technical sell-off last week.  The S&P is off roughly 7% from its highs, while the NASDAQ’s drawdown from its top is greater than 10%.  Mega cap technology issues continued to drive the sell-off; however, the energy sector led losers with nearly a 6% loss on the week.  Again, there was not much news on the tape to catalyze the selling.  In Washington, the Senate failed to pass a 300 billion dollar coronavirus relief bill, but this was hardly a surprise. 

A halt to an AstraZeneca coronavirus trial due to a patient developing an adverse effect seemed like a negative headline. Still, subsequent headlines diminished the initial news with suggestions that the trial could be back up and running very soon.  There were also more negative headlines on trade with China as Trump threatened to blacklist another Chinese technology company in the semiconductor sector.

For the week, the S&P 500 lost 2.5%, the Dow fell 1.7%, the NASDAQ lagged, losing 4.1%, and the Russell 2000 shed 2.5%.  The US Treasury curve flattened a bit with the 2-year note yield decreasing by three basis points to close at just 0.13%.  The 10-year yield fell five basis points to close at 0.67%.  Gold gained $14.20 on the week, closing at $1948.30 an Oz.  Oil tumbled nearly 6% for the week as investors question the demand for energy, and EIA crude inventory data showed a build of 2 million barrels.  WTI fell $2.26 to close at $37.34 a barrel.  There were no changes to our models for the week. 

Economic data released during the holiday-shortened week was limited.  PPI and CPI data came in higher than expected on the Core readings, up 0.4% for each.  Initial Jobless Claims were a bit disappointing, coming in at 884k versus expectations of 850k.  Continuing Claims regressed, coming in at 13.385 million relative to the prior figure of 13.29 million.