Stocks Drop After Labor Day Weekend
2:03 pm Tuesday, September 06th, 2022
The stock market had a volatile start to the holiday-shortened week. Major indices opened higher before quickly giving back those gains and logging session lows. Upside momentum picked up midmorning with each of the major indices pushing back into positive territory. The market again gave way to selling pressure in recent action with the major indices trading in a lateral flow with modest losses.
Buying interest that moved the market midmorning was fueled by positive sentiment after the S&P 500 tested, and found support at, the 3,900 level. Rising Treasury yields are limiting that buying interest, however, with the 2-yr note yield breaching the 3.50% mark, up 11 basis points to 3.51%. The 10-yr note yield is up 14 basis points to 3.34%.
Today’s trade reflects a general risk-off sentiment with the defensive-oriented sectors outpacing the broader market. Utilities (+0.6%) and health care (+0.3%) are near the top of the leaderboard while communication services (-1.0%) and energy (-0.5%) bring up the rear.
Market breadth shows strong conviction on the sell side with decliners leading advancers by a nearly 2-to-1 margin at the NYSE and a 5-to-3 margin at the Nasdaq.
Separately, energy complex futures are mixed amid several macro headlines, including reports that Russia indicated the shutdown of the Nord Stream 1 Pipeline is going to be long-lasting. Also, OPEC+ announced a small production cut of 100,000 barrels per day. WTI crude oil futures are flat at $86.87/bbl. Natural gas futures are down 5.3% to $8.31/mmbtu.
In addition, the dollar is rising sharply today along with interest rates. The yen has fallen to a new 24-yr low against the dollar (USD/JPY). The euro, meanwhile, is at a 20-yr low against the greenback (EUR/USD).
