Technology Shares Slump After Epic 2-Month Rally: Markets Wrap
(Bloomberg) -- Megacap technology shares headed for the first two-day slide since mid-May, as investors fled high-flyers that powered a 40% rally from the pandemic lows.
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The broader market gauge S&P 500 swung between gains and losses as investors weighed earnings season and the economic hit of rising virus cases.
The Nasdaq 100 fell as much as 2%, with Zoom Technologies Inc., Amazon.com Inc. and Netflix among the hardest hit. Tesla Inc. pared early gains, while Microsoft Corp. retreated. The Fang cohort and its ilk had powered to unprecedented levels and valuations that pushed well past $1 trillion. Banks were mixed after JPMorgan Chase & Co. reported strong trading results but booked major provisions for loan losses. Wells Fargo & Co. tumbled after cutting its dividend and reporting its first quarterly loss since 2008.
“We may see this earnings season as one where companies speak honestly and send a slightly different message than, we’re never going to look back from the bottom,” said Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. “I think it’s appropriate that companies are honest even if it’s deemed as throwing cold water on the v-shaped narrative.”
U.S. stocks finished in the red yesterday after the S&P 500 briefly touching the highest level since the coronavirus pandemic. Equities have largely treaded water over the past month as worries about new virus cases are offset by optimism over stimulus spending and the economic recovery.
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Still as new outbreaks appear around the world, officials are putting stricter measures in place to control the spread. Japan said a new state of emergency is possible and Hong Kong implemented its toughest social distancing measures yet. California has closed indoor dining and bars, and face coverings will soon be compulsory in all shops in England.
“Should lockdowns have to be further extended in the U.S., this bad news might be also good news for the markets in respect to the Fed and Washington even extending their supporting measures for the economy,” said Robert Greil, chief strategist at Merck Finck.
Treasuries gained and the dollar was mostly lower. The U.K.’s two-year bonds yielded less than Japanese debt for the first time. Copper ended a six-day winning streak amid renewed tensions between Beijing and Washington.
In Asia, equities were broadly lower with Chinese and Hong Kong shares faring the worst. The Trump administration rejected China’s expansive maritime claims in the South China Sea, reversing a previous policy of not taking sides in such disputes.
U.S. Denounces China’s Claims to South China Sea as Unlawful
Here are some key events coming up:
The EIA crude oil inventory report is due Wednesday.China releases second-quarter GDP on Thursday as well as key economic indicators for June.The European Central Bank meets to set monetary policy on Thursday, with President Christine Lagarde holding a virtual press conference afterward.
These are the main moves in markets:
Stocks |
| The S&P 500 Index climbed 0.2% to 3,162.62 as of 10:48 a.m. New York time. |
| The Dow Jones Industrial Average advanced 0.9% to 26,324, the highest in almost five weeks. |
| The Nasdaq Composite Index declined 0.4% to 10,347.04, the lowest in a week. |
| The MSCI All-Country World Index dipped 0.3% to 539.01. |
Currencies |
| The Bloomberg Dollar Spot Index declined 0.2% to 1,208.48. |
| The euro gained 0.5% to $1.14, the strongest in more than four months. |
| The Japanese yen was little changed at 107.24 per dollar. |
Bonds |
| The yield on two-year Treasuries dipped less than one basis point to 0.15%, the lowest in two weeks. |
| The yield on 10-year Treasuries dipped one basis point to 0.61%, the lowest in more than 11 weeks. |
| Germany’s 10-year yield declined three basis points to -0.44%, the biggest fall in more than a week. |
Commodities |
| West Texas Intermediate crude increased 0.3% to $40.24 a barrel. |
| Gold strengthened 0.3% to $1,807.54 an ounce. |
| Copper declined 0.9% to $2.93 a pound, the first retreat in almost three weeks and the largest drop in more than four weeks. |
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©2020 Bloomberg L.P.
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