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the S&P 500 Index (SNPINDEX: ^ GSPC) It fell a sharp 3.5% on October 28, one of the worst days in months in a week in which stocks are closing lower every day. So far this week, the index of more than 500 stocks that represent about 80% of the value of the US stock market is down more than 5.6%.
Today’s sell-off is the product of the same thing that has had investors nervous for the past few days: a resurgent coronavirus pandemic. More than 72,000 new cases of COVID-19 were reported in the US over the past 24 hours, marking the continued upward trend over the past two weeks, with the 7-day moving average in the US. Now at the highest levels since the virus started. spreading in the country. Overseas, Germany and France are taking steps to reduce the spread of the disease, and investors are expecting some US states to take similar steps.
Today’s brutal sell-off was particularly notable at the top of the index. Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG)Y Facebook (NASDAQ: FB) all stocks fell 5% or more. the Select Sector SPDR ETF Technology (NEW: XLK) it fell 4% and is down 12% since the September peak, back in correction territory.
But before you think that the drop today was just the big names at the top of the index, think again: 491 of the index’s 503 stocks fell today.
Automatic data processing (NASDAQ: ADP) Y General Power (NYSE: GE) they were the only two to gain more than 4% today, following earnings reports that were good enough to convince investors to rally their shares on a very bearish day.
Image source: Getty Images.
Coronavirus concerns, economic and political uncertainty have investors fearful
Today’s stock sell-off was largely the product of investors concerned about the implications of another wave of coronavirus, particularly the potential economic implications of a return to stay-at-home orders that swept the global economy in March and April.
Crude oil prices fell more than 5% today, putting West Texas Intermediate and Brent crude futures below $ 40 a barrel, erasing all modest gains during the peak summer demand season. Crude oil inventories are increasing, and the global oil giants are adding more oil to the market, causing oil stocks to drop further as uncertainty and risk in the oil patch mount.
And with a huge election in the US next week, and Congress in recess, which means there will be no government stimulus in the works anytime soon, there is an enormous amount of bearish uncertainty dominating the narrative.
Tech stocks are back in correction
Down 4% today, tech stocks have now returned 10% of their gains since the peak in early September. The S&P 500 as a whole is not far behind, 8.7% less than the all-time high. The largest megacap stocks at the top of the index have fallen more than the S&P as a whole, while Apple and Microsoft have fallen the most:
^ SPX Data by YCharts
Even Microsoft’s strong earnings weren’t enough to appease investors. The company reported $ 37 billion in revenue, up 12% and a 32% increase in earnings per share, to $ 1.82. The next few days will be interesting as the rest of the mega-tech cohort will report their latest quarterly results.
ADP & GE among the few bright spots
GE reported earnings before opening today, beating expectations with $ 19.4 billion in revenue and surprising investors who expected a loss, earning $ 0.06 per share, adjusting some non-cash expenses related to the restructuring at course. According to management, GE is on track for the cost reduction portion of its restructuring, having already achieved about $ 1.5 billion of the $ 2 billion in planned cost reductions. Put it together, and GE has gone from having trouble to “getting better,” but it still has a long way to go before it can call it recovered. Between ongoing challenges in end markets (try selling jet engines right now) and a balance sheet that still needs work, CEO Larry Culp still has work to do.
ADP announced a small 1% decrease in revenue, with 3% increase in earnings, both relatively in line with expectations. Where ADP made investors happiest was its outlook, that it now expects revenues to remain relatively stable, a real concern for a human resources and payroll services company amid the worst jobs crisis in a decade, and that companies earnings do the same. .
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