(CercleFinance.com) – Wall Street suffers a new air hole that will cause damage since beyond the river scores on the downside, the Nasdaq (-3.02%) and the S & P500 (-2.37%) quite frankly break important medium-term directional supports (10.750 and 3.280Pts respectively).
Another singularity to ponder, these 2 indices align a 5th fallback session out of 6, the day after the only positive session since September 15 … but 24 hours later new lows are reached which bring the scores back to their levels at the end of July , 12% from all-time September 3 highs for the Nasdaq and -9% for the S & P500.
The Dow Jones, supported by the Nike title which soared by + 9%, yielded only -1.9%.
Small caps are not doing better, the Russel-2000 even posts the worst score with -3.05%.
The ‘VIX’, a stress barometer, jumped from + 8.3% to 29.1 … but this is not a particularly spectacular variation given the violence of the trend reversal in ‘intraday’.
Wall Street is starting to fear the lack of consensus on the new $ 1.500 billion ‘Covid-plan’ before the elections: this seemed to be taken for granted at the end of August but 4 weeks later, the positions of the 2 camps seem more distant than ever with a disagreement total on the ‘timing’ of the appointment of the 9th judge to the Supreme Court (which the Republicans want to complete before November 3), but also on his profile because Trump wants to substitute a conservative personality for the very progressive judge Ginsburg.
Jerome Powell did not restore morale on Wall Street on the occasion of the second day of hearing before Congress and not promising anything pleasant (like more aggressive asset buybacks): he even points out that the FED is less has been active for several weeks in the secondary market for corporate debt (so things are going better, the cash flows are less tight).
He also considers the current monetary policy ‘well calibrated’ (in other words, no need to do more for now).
These are not the US figures of the day that could stem the ‘sell off’ of the second part of the session since the result of the PMI ‘Markit’ surveys on activity in the private sector in the States is a little disappointing: the composite activity index crumbles from 54.6 to 54.4 in September.
The ‘services’ purchasing managers index fell to 54.6 from 55 in August, which is more worrying. The manufacturing index is the only positive, at 53.5 in September against 53.1 in August.
In addition to the neutrality of the Fed’s positioning, many commentators pointed to the disappointment following Elon Musk’s performance on Tuesday evening, big announcements were expected but nothing came to justify very ‘tense’ valuation levels: Tesla plunges from -10.3%, we also find Salesforces -4.8%, Apple -4.2%, Nvidia, Skyworks, Splunk -4%, AMD -3.8%, Microsoft -3.3% …
The Nasdaq-100 (-3.2%) had only a handful of rare survivors: Western Digital + 6.7%, Illumina + 1.7%, Zoom + 1.6% …
A barrel of WTI may have given up little ground (0.7% to $ 39.5), doubts about the sustainability of the economic recovery have plunged Apache -9.3%, Marathon Petroleum -7, 4%, Occidental and Valero -6.1%, Marathon Oil -5.8%, Devon -5.7%, Diamonbak and EOG -5.4%, Halliburton -5.1%, Concho -5%, Noble and Chevron -4.8% …
Copper also fell, and as this is a liquidation wave that spares no asset class, Gold and Silver also corrected heavily with -2.5% on the former (1.864 $ / Oz and -6.5% on the second at $ 22.9 / Oz).