Stocks wobbled between gains and losses before sliding lower in the final hour of trading, weighed by renewed weakness in the tech (-1.6%) and financial (0.5%) sectors that thwarted follow-through buying interest from Friday's rally.
The S&P 500 (-0.6%) closed below its 200-day moving average (2,766.54) and the tech-heavy Nasdaq (-0.9%) was the day's worst performer among the major indexes, while the small-cap Russell 2000 outperformed (+0.6%).
Notable tech components that fell included Apple (-2.1%) and Microsoft (-1.8%), while the financials sector was unable to gain any traction after an underwhelming response to Bank of America's (-1.9%) better than expected earnings report.
Among sectors bucking the broader downward trend were consumer staples (+0.6%), real estate (+0.5%) and utilities (+0.4%).
U.S. Treasury prices ticked lower, with the 10-year yield adding 2 bps to 3.16% and the two-year yield gaining a basis point to 2.85%.
Crude oil prices remained relatively subdued despite rising U.S.-Saudi Arabia tensions following the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi; November WTI settled +0.6% at $71.78/bbl.
Crude oil prices rise only modestly amid rapidly escalating tensions between the U.S. and Saudi Arabia over the disappearance and alleged murder of Washington Post columnist Jamal Khashoggi at the Saudi consulate in Istanbul; U.S. WTI +0.3% to $71.58/bbl, Brent +0.3% to $80.68/bbl.
Pres. Trump says Saudi King Salman denies knowing what happened to Khashoggi; Trump says he is sending Sec. of State Pompeo to meet the king.
Turkish authorities say they reached an agreement with Saudi Arabia to search the kingdom’s consulate in Istanbul for Khashoggi, a sign that the countries are seeking to avoid direct confrontation over the incident.
Goldman Sachs reiterates its long call on crude oil, as the "potential magnitude of supply shortfalls from Iran in the short term or Saudi potentially outweighs for now a backdrop of weaker fundamentals and increased macro uncertainty."
Despite a Saudi threat of higher crude prices if the U.S. pushes too far, most analysts believe it is difficult to imagine Saudi Arabia taking action that would hit world oil supply.
Also, crude markets are supported by data that shows South Korea did not import any oil from Iran in September for the first time in six years, before U.S. sanctions against Iran take effect in November.
U.S. stock index futures are following Asia and Europe into the red as risk-off sentiment pervades amid increasing tensions between Riyadh and Washington. Dow -0.7%; S&P 500 -0.7%; Nasdaq -1.1%.
The Kingdom has vowed an economic response "with greater action," should the U.S. impose sanctions against Saudi Arabia over the Khashoggi case.
Crude warning? "If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure," Al Arabiya's Turki Aldakhil wrote in an op-ed.
Oil is up 0.4% at $71.64/bbl, gold is 0.9% higher at $1232/ounce and the 10-year Treasury yield is up 1 bps to 3.15%.
Harris (NYSE:HRS) and L3 Technologies (NYSE:LLL) have agreed to an all stock merger of equals, creating the sixth largest U.S. defense contractor and a top 10 defense company globally.
The companies say the transaction will add to combined earnings per share in the first year after the close of the deal, and generate $500M in annual pretax cost savings and $3B in free cash flow by the third year.
Sears (NASDAQ:SHLD) has filed for bankruptcy after years of staying afloat through financial maneuvering, a merger with Kmart and relying on billions of CEO Eddie Lampert's own money.
It's set to shutter 142 stores towards the end of the year end and begin liquidation sales shortly.
While Lampert will step down as CEO, he'll remain Sears chairman, as his ESL Investments negotiates a debtor in possession loan and other funding to support what was once the country's biggest retailer through bankruptcy.
Uniting two big providers of defense communications and electronics, Harris (NYSE:HRS) and L3 Technologies (NYSE:LLL) are nearing an agreement to merge, with the goal of completing an all-stock deal as early as this weekend, WSJ reports.
The $33.5B combination would add to a flurry of aerospace and defense M&A amid increased military spending and a boom in jetliner sales.
TransDigm agreed this week to buy Esterline Technologies for $3.6B and Boeing closed its purchase of components distributor KLX.
Regulators may vote as soon as next week on removing federal oversight from Prudential Financial (NYSE:PRU) -- the last remaining nonbank firm with the "systemically important financial institution" designation, The Wall Street Journal notes.
That wouldn't be a surprise move, as it's been expected at some point since the beginning of the Trump administration. As recently as 2016, four nonbank firms were SIFI designated (AIG, GE Capital and MetLife have since been removed).
The Financial Stability Oversight Council's Tuesday agenda has a closed-door discussion of “an update on the annual re-evaluation of the designation of a nonbank financial company" which must be Prudential.
Nine of the council's 10 voting members are Trump appointees.
Stocks recouped a chunk of their weekly losses in a volatile session, as the S&P 500 added as much as 1.7% in the early going but losing most of it intraday before rallying to finish 1.4% higher.
The Dow settled with a 1.2% gain after briefly turning negative, and the tech-heavy Nasdaq outperformed with a 2.3% surge, but small caps lagged, as the Russell 2000 posted a slim 0.1% gain.
For the week, the Dow sank 4.2%, the S&P slumped 4.1% and the Nasdaq tumbled 3.7%.
The financials sector finished today's trade just 0.1% higher after adding as much as 1.6% following earnings reports from J.P. Morgan, Citigroup and Wells Fargo; 10 of 11 S&P sectors finished in the green, led by tech's 3.2% boost.
The FAANG stocks, which were some of the biggest casualties of this week’s rout in stocks, rebounded: Facebook +0.2%, Apple +3.6%, Amazon +4%, Netflix +5.7%, Google +2.8%.
U.S. Treasury prices finished roughly flat, with the benchmark 10-year yield up a basis point to 2.14%, while the U.S. Dollar Index gained 0.3% to 94.96 in rebounding from a more than two-week low, and November WTI crude oil climbed 0.5% to $71.34/bbl.
It was shaping up to be another ugly session as the averages gave up big early gains and turned negative in early afternoon trade. But there's been another reversal and the Dow (+1%), S&P 500 (+1.2%), and Nasdaq (+2%) have all moved back to near session highs with 20 minutes to go before the closing bell.
This morning's big rally in the Dow and S&P 500 has been completely snuffed out in early afternoon action, with the Nasdaq - earlier up more than 2% - is clinging to a 0.65% gain.
Financials are leading the fade as investors sell the mostly good earnings news. Also in the red is the industrial sector, led by a 2.25% decline in GE after that company - under new management - delayed its Q3 report.
"Of the 50M people whose access tokens we believed were affected, about 30M actually had their tokens stolen," the company says.
The vulnerability came in a feature called "View As" that lets account holders see their profile as it looks to other users. Stolen access tokens can be used as "digital keys" to take over people's accounts.
The company's been "working around the clock" to investigate, it says. It will send customized messages to the 30M affected people, and all users can determine whether they were affected in Facebook's Help Center.
This attack did not include Messenger, Messenger Kids, Instagram, WhatsApp, Oculus, Workplace, Pages, payments, third-party apps, or advertising or developer accounts, Facebook says.
In the run-up to AT&T's (T +1.2%) $85B acquisition of Time Warner, CEO Randall Stephenson floated the idea of selling CNN to ease Justice Dept. concerns over the merger, Bloomberg reports.
That news from a deposition conflicts with Stephenson's public stance that he didn't offer to sell CNN to mollify the DOJ.
Stephenson raised the issue during a November meeting with antitrust chief Makan Delrahim, according to the deposition, which the government is citing in its appeal of the court decision that allowed the merger to go forward.
Asked if he was the first one to raise the subject of CNN with Delrahim, Stephenson said “Oh, yeah ... I asked Mr. Delrahim, I think my language, this will be pretty close: ‘If I were to walk in here tomorrow and tell you I had gotten my head around selling CNN, would that allow you to wave this deal through?’ And he said, unequivocally, ‘No.’ ”
The government took that as a proposal to sell; shortly after that meeting, Stephenson said publicly that he didn't propose selling the network: “Throughout this process, I have never offered to sell CNN and have no intention of doing so."
Up more than 1% earlier in the session, the S&P 500 is now ahead 0.9% and Dow just 0.6%.
The banks were nicely higher early today after JPMorgan, Citigroup, Wells Fargo, and PNC reported pleasing Q3s. The big players have given up much of their gains though, and the regionals are sharply lower, with some pointing to disappointing loan growth out of PNC. The SPDR S&P Bank ETF (KBE -1.6%).
The Nasdaq remains very strong, up 1.5%, though it was ahead well over 2% about 90 minutes ago.
Stocks spring out of the gate, with each of the major U.S. indexes jumping more than 1%; Dow +1.4%, S&P +1.6%, Nasdaq +2.2%.
Tech shares (+2.5%) are staging a big rebound from steep losses earlier this week, and financials (+1.4%) are higher after big banks JPMorgan Chase (+1.2%) and Citigroup (+2.8%) both beat earnings estimates while Wells Fargo (+1.3%) came up short.
Battered FAANG stocks open with solid gains: Facebook +1.2%, Amazon +3.9%, Apple +2.5%, Netflix +4.9%, Google +2.5%.
The only sector lower so far is utilities (-0.2%), which has been one of this month's strongest performers.
European markets post modest gains, with U.K.'s FTSE +0.5% while Germany's DAX and France's CAC both +0.6%; in Asia, Japan's Nikkei +0.6% and China's Shanghai Composite +0.9%.
In the U.S. Treasury market, the yield curve seeks to reverse yesterday's flattening move, with the benchmark 10-year yield up 3 bps to 3.16%, and the two-year yield flat at 2.86%.
Automobile sales in China plummeted 11.6% in September to 2.39M units, according to data from the China Association of Automobile Manufacturers.
Passenger vehicle sales (sedan, MPV, SUV and crossover utility vehicles) were down 12.0% during the month.
The monthly drop was the largest in China since 2011 and marks the third straight month of declines amid trade issues.
The Chinese auto market is up 1.5% YTD through the end of September to 20.49M vehicles.
The three-month downturn in auto sales in China is a negative factor for global automakers as well as domestic producers due to their heavy investments in China on the expectation of a solidly growing market.
"It’s very alarming and is even causing panic among some automakers and suppliers. That’s because the market has been growing non-stop every year for more than twenty years, and those companies make plans based on growth," notes a Shanghai-based analyst from research firm Automotive Foresight.
The third quarter earnings season kicks off in earnest today on the heels of a backup in interest rates and a selloff on Wall Street.
JPMorgan, Wells Fargo, Citigroup and PNC Financial will all report before the bell, with U.S. futures getting a big bump overnight pending the results. Dow +0.6%; S&P 500 +0.7%; Nasdaq +1.2%.
Corporate tax cuts, strength in the U.S. economy, rising oil prices and share buybacks are expected to fuel double-digit earnings growth, but analysts will also be watching how often companies mention tariffs hurting their profits.
China's export engine kicked into high gear in September, producing a record trade surplus of $34.13B with the U.S. that could intensify an already-heated trade dispute.
The figure further surged to $225.79B over the January-September period as President Trump threatens an additional $267B of tariffs on Chinese imports amid trade tensions between the world's two largest economies.
Those workers had been told they weren't eligible for severance, but now they have the choice of taking the exit package or moving to Infosys with a two-year guarantee of comparable pay and benefits.
That's in response to some disappointment from employees that they were being transferred to a new company rather than receiving severance packages comparable to those colleagues received.
Verizon recently signed a $700M IT outsourcing deal with Infosys, and decided to rebadge the workers hours before several thousand colleagues got a different buyout offer of three weeks of pay for each year served (up to 60 weeks).
After Sen. Rand Paul argued for a national-security review of Broadcom's (NASDAQ:AVGO) $19B acquisition of CA Technologies (NASDAQ:CA), Broadcom announced that a forged memo was circulating among members of Congress over the need for such a review.
Shares of both companies fell yesterday and now the Justice Dept. and SEC are probing whether the memo was made to manipulate the prices.
Those probes may not ultimately conclude that fraud was committed, but the Defense Dept. says "Our initial assessment is that this is likely a fraudulent document."
AVGO fell 1.3% during the regular session and is flat after hours; CA rose 1.5% today and is flat postmarket.
Stocks extended yesterday's rout in a volatile session that saw the Dow industrials swing more than 750 points from its high to its low before closing 545 points lower to bring its two-day losses to more than 1,300 points.
The S&P 500 sank 2.1% in its sixth straight decline and closed below its 200-day moving average for the first time since April; the benchmark average is now down 5.5% for the week and 6.9% below its Sept. 20 record close.
“U.S. growth is still very good,” says Jason Draho of UBS Global Wealth Management. “But we’re waking up to the reality that this late in the economic cycle, you get higher rates, you get more volatility and more bumps in the road.”
A drop in bond yields today offered some relief for stock traders, who have been cautious since yields shot to multi-year highs last week; the 10-year yield fell 9 bps to 3.13% and the two-year Treasury note slipped a basis point to 2.85%.
The flattening of the yield curve weighed on lenders, which depend on the interest rate differential between what they pay for deposits and what they make on loans, sending the S&P's financial sector tumbling 2.9%.
The energy sector (-3.1%) was another major underperformer, as WTI November crude oil fell 3% to a three-week low $70.97/bbl.
The tech and communication services sectors, which contain many of the high-growth names that had been leading the market higher, tried to stage a rebound and were up modestly intraday before finishing lower by 1.3% and 0.8%, respectively.
Investors hope strong Q3 earnings will provide a pillar of support for the stock market; big banks JPMorgan Chase, Citigroup and Wells Fargo unofficially kick off Q3 earnings season tomorrow morning.
Tencent Music Entertainment (TME) -- the Tencent unit that had planned one of the biggest public debuts of the year -- is pausing its initial public offering amid market turmoil, The Wall Street Journal reports.
It will wait at least until November to come out in hopes that pricing will stabilize in the meantime.
Tencent Music had planned to start a roadshow next week and start trading the week after that.
Amid a number of downdrafts in the stock market, parent Tencent (OTCPK:TCEHY) has been hit particularly hard, with shares down 34% so far this year. OTCPK:TCEHY dropped 1% in U.S. trading today.
That includes bad actors on Facebook's anti-spam rules. Some were "ad farms using Facebook to mislead people into thinking that they were forums for legitimate political debate."
That's different from older spam that would hawk fraudulent products, Facebook notes.
Meanwhile, a New York Times report notes that the well-known Facebook disinformation campaigns linked to Russia for the 2016 election are now increasingly created by Americans.
"Politics has always involved shadings of the truth via whisper campaigns, direct-mail operations and negative ads bordering on untrue," Sheera Frenkel writes. "What is different this time is how domestic sites are directly emulating the Russian playbook of 2016 by aggressively creating networks of Facebook pages and accounts — many of them fake — that make it appear as if the ideas they are promoting enjoy widespread popularity."
That's also happening on Twitter (TWTR -0.3%), researchers said.
That could stave off outright liquidation but would take some key assets off the table as Sears navigated the reorganization.
A traditional reorg is still a possibility, though.
Lampert is said to be looking at bidding for the Kenmore brand and home services business along with some real estate. He had already offered $480M for Kenmore and home services in a previous rescue plan and is now looking at that same approach through the bankruptcy process.
He could forgive some Sears debt in order to finance the purchases, Reuters notes.
"It’s a correction that I think is caused by the Federal Reserve,” says the president, responding to a question about the stock market. "I think the Fed is far too stringent and they’re making a mistake."
Chairman Powell? "I'm not going to fire him," says Trump.
Stocks are near session lows, the S&P 500 down 0.7%.
The dollar (UUP, UDN) continues to hold modest losses.
In its monthly oil market report, OPEC says world oil demand this year will rise by slightly more than 1.54M bbl/day, 80K less than last month’s estimate, while 2019 oil demand is expected to rise by 1.36M bbl/day, 50K less than last month’s estimate.
OPEC Secretary-General Barkindo says the oil market is well supplied and projections for 2019 "clearly show a possible rebuilding of stocks," suggesting the group is in no rush to expand a June agreement that raises production.
Crude oil prices are lower following a spike in U.S. crude stockpiles reported by the American Petroleum Institute and ahead of the Energy Information Administration's release of official U.S. government inventory data at 11 a.m. ET; U.S. WTI -1.7% at $71.95/bbl, Brent -1.9% at $81.49/bbl.
Stocks poke into the green after opening with slimmer losses than feared, following the release of weaker than expected U.S. inflation data;S &P and Dow both +0.2%, Nasdaq +0.8%.
Futures fell as much as 1.5% overnight following yesterday's broad-based selloff but staged a rebound after the September Consumer Price Index and Core CPI both showed less than expected increases of 0.1%; on a Y/Y basis, total CPI is up 2.3% (vs. 2.7% in August) and core CPI is up 2.2% (vs. 2.2% in August).
In response, Treasury yields have pulled back from multi-year highs, with the benchmark 10-year yield down 4 bps to 3.18%, 10 bps below its recent seven-year high on Tuesday.
"The economy may be running hot, but it isn't fast enough to kick up inflation pressures and calls into question the need for Fed policymakers to move interest rates to higher levels," says Chris Rupkey, chief financial economist at MUFG Union Bank.
European bourses post broad losses, with U.K.'s FTSE -1.5%, France's CAC -1.2% and Germany's DAX -0.8%; in Asia, Japan's Nikkei -4% and China's Shanghai Composite -5.2% to its lowest level in more than four years.
In the U.S., the energy (-1.3%) and utilities (-1.1%) sectors lag, while financials (-0.2%) pare losses after a shaky start.
U.S. WTI crude oil -1.7% at $71.92/bbl after the API reported a sharp rise in U.S. crude stockpiles.
Still ahead: EIA petroleum inventories, EIA natural gas inventory
The "Fed has gone crazy crowd" will get a bit more ammo out of this morning's CPI report, with the core rate in September coming in at an unexpectedly soft 0.1%. On a year-over-year basis, core CPI was up 2.2% - flat from August, but shy of estimates for 2.3%.
The 10-year Treasury yield has ticked modestly lower on the number, now at 3.176%. TLT +0.45%, TBT -0.9% premarket.
U.S. stock index futures continue to gain ground, the S&P 500 now off just 0.3%.
via Bloomberg, traders reactions to Wednesday's selloff that saw the S&P 500 down more than 3% and Nasdaq drop over 4% were mixed. Some are buying the dip, others are still waiting for signs of strength. Overall, very little panic:
"It’s just people saying ‘Gosh, my neighbor is selling.’ There is no news today. That to me means you’re going to take this back. I don’t know if it takes a day or a week. I would absolutely be buying this.” - Josh Golub, chief equity strategist, Credit Suisse
"I don’t think anyone senses any panic at this point. Given the levels we are currently at, a lot of people think that something like this and even more downside are slightly overdue." - Larry Weiss, head of trading for Instinet LLC
“We’ve been used to one direction lately, and that’s up. Naturally there are ebbs and flows, and that’s what we’re seeing right now. While it may be tempting to make a move to mitigate portfolio risk based on today’s activity, timing the market rarely works to an investor’s benefit.” Mike Loewengart, VP of investment strategy, E*Trade
"Many are pointing to overall confusion, gross exposure reductions (selling longs/covering shorts), risk parity/factor related unwinds, etc., driving the overall selling. ETF options volumes have been relatively light since Friday’s initial breakdown and we would like to see that pick up and more activity in the puts before any true stabilization kicks in for a trade-able bottom." - Alon Rosin, head of institutional equity derivatives, Oppenheimer
“I do not think the cycle peak for stocks is in, if this is the start of a correction then so be it, but I think the bull market has gas left in its tank. Right now it’s dealing with a decline in certain sectors driven by late cycle factors and it’s coming to grips with it in an ugly way.” - Michael Antonelli, institutional equity sales trader, Baird
Responding to the selloff in the States this afternoon, the Shanghai Composite (NYSEARCA:FXI) is down 2.45% to its lowest level since 2014. The Hang Seng (NYSEARCA:EWH) is off 3.2%, the Nikkei (NYSEARCA:EWJ) is down 3.9%, and Australia (NYSEARCA:EWA) is lower by 2%.
"The Fed has gone crazy," Pres. Trump says in reaction to today's stock market plunge. "It's a correction that we've been waiting for for a long time, but I really disagree with what the Fed is doing."
Based on today's rout, which caps five straight declines on the S&P 500, investors appear to agree; the losing streak follows Fed Chair Powell's Oct. 3 comment that the central bank is "a long way" from getting rates to neutral.
"It's not an easy transition. It's going to be volatile but over the long term it's better for the health and robustness of markets," El-Erian says, adding that he expects the pullback to be temporary because of strong U.S. economic growth.