Stocks attempt to regain footing after Wednesday’s losses. Stocks are little changed at the open this morning after the S&P 500 Index tumbled 2.4% Wednesday, bringing its decline since September 2 to 9.6%, due in part to the Federal Reserve’s cautious economic commentary. Rising coronavirus cases in Europe and the United States, dimming hopes of another stimulus package, and election uncertainty continue to weigh on sentiment during a challenging seasonal period for stocks. Global markets are mostly lower with losses in Europe in midday trading, while Asian markets closed broadly lower.
Jobless claims disappoint. Filings for initial jobless claims came in above expectations at 870,000 for the week ending September 19, essentially flat week over week (source: US Department of Labor). Continuing claims didn’t look much better, falling about 170,000 to 12.6 million (week ending September 12) and missing Bloomberg’s consensus forecast of 12.3 million. The job recovery has stalled a bit and headwinds remain. More stimulus may be needed.
COVID-19 cases in Europe are rising at a troubling pace. When we compare COVID-19 case trends in Europe to the United States we see two very different pictures. After warming up to European equities this summer, we believe the risk that further containment efforts may be a drag on growth in European economies supports our continued preference for the United States over Europe among developed markets. We discuss this in detail later today on the LPL Research blog.
Technical update. Stocks declined throughout the session on Wednesday, with the S&P 500 closing near session lows and losing 2.4%. All 11 sectors were lower on the day, and breadth on the NYSE was even worse than Monday, with decliners outnumbering advancers by nearly 10:1. Stocks are still short of oversold conditions by most measures, but we see substantial support for the S&P 500 between 3105 and 3200, and similar support for the Nasdaq just above 10,000.
COVID-19 news. New daily case growth in the United States decelerated Wednesday, falling 3.4% week over week to slightly below 43,000 (source: COVID Tracking Project). Hospitalizations edged lower, falling 5.7% week over week and bringing the seven-day average down by 1.6%, though the recent increase in cases may lift these numbers in the coming days. Tragically, deaths in the United States from this terrible illness have exceeded 200,000. Johnson & Johnson’s vaccine has begun late-stage trials, joining three other candidates.
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