Stocks Extend Fall: Nasdaq Hits 2-Month Low
3:19 pm Wednesday, December 28th, 2022
The stock market was trading with a positive bias shortly after the open, led by some decent buying interest in a few mega cap stocks. The S&P 500 got rejected around the 3,850 level and things started to deteriorate from there. Currently, the S&P 500 is fighting to maintain its position above the 3,800 level.
There was no specific news catalyst to account for the downturn. Instead, it was induced by a general lack of buyer conviction and presumably some ongoing tax-loss selling efforts. Shortly after the open, advancers led decliners by a roughly 3-to-2 margin at both the NYSE and the Nasdaq. Now, decliners lead advancers by a greater than 3-to-1 margin at the NYSE and a nearly 2-to-1 margin at the Nasdaq.
Notably, the downturn coincided with selling interest picking up in the bond market. The 2-yr note yield is still down seven basis points at 4.36%, but the 10-yr note yield has moved noticeably higher from its earlier low of 3.80% to 3.87%.
Also, mega caps and semiconductor stocks had been important upside drivers for the broader market initially, but pulled back as the market declined. The Vanguard Mega Cap Growth ETF (MGK) had been up as much as 0.7% and trades down 0.6% now. The PHLX Semiconductor Index was up 0.6% at its high versus a 0.9% decline currently.
Tesla (TSLA) has been able to buck the downtrend today after ARK Innovation ETF (ARKK) purchased 25K shares, but the stock also retreated from an earlier gain of 6.6%.
Only one of the 11 S&P 500 sectors, financials (+0.1%), sits in positive territory. On the flip side, the energy sector (-1.7%) is the weakest link today after outperforming the broader market this year. A sharp turn lower in energy complex futures has provided a catalyst for some profit-taking efforts. WTI crude oil futures are down 1.6% to $78.31/bbl and natural gas futures are down 10.6% to $4.72/mmbtu, which has coincided with the arrival of warmer winter temperatures.
Today’s economic data was limited to Pending Home Sales, which fell 4.0% in November (Briefing.com consensus -0.2%) following a 4.6% decline in October.
