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Beyond the Numbers

U.S. Stocks May Regain Ground In Early Trading
9/9/2020 9:01 AM

The major U.S. index futures are pointing to a higher open on Wednesday, with stocks likely to regain ground after moving sharply lower over the three previous sessions.

Traders may look to pick up stocks at relatively reduced levels following the recent sell-off, which dragged the tech-heavy Nasdaq down 10 percent from its record highs.

Tech stocks may move back to the upside after leading the way lower over the past few sessions, with Apple (AAPL), Microsoft (MSFT), Facebook (FB) and Amazon (AMZN) all posting notable gains in pre-market trading.

However, buying interest may be somewhat subdued after AstraZeneca (AZN) announced that it has put a hold on its coronavirus vaccine trials due to safety-concerns.

A lack of major U.S. economic data may also keep some traders on the sidelines ahead of the release of key inflation data in the coming days.

Stocks showed a significant move to the downside during trading on Tuesday, extending the pullback seen over the course of the two previous sessions. The major averages all showed substantial moves into negative territory.

The major averages remained firmly negative throughout the session before closing firmly in the red. The Dow tumbled 632.42 points or 2.3 percent to 27,500.89, the Nasdaq plunged 465.44 points or 4.1 percent to 10,847.69 and the S&P 500 slumped 95.12 points or 2.8 percent to 3,331.84.

The weakness on Wall Street came as traders continued to cash in on recent strength in the markets, with the Nasdaq and the S&P 500 pulling back further off record highs.

Technology stocks helped to lead the way lower once again, as Facebook, Amazon, Microsoft and Apple all posted steep losses on the day.

While tech stocks have helped to lead the markets off their March lows, traders seem to feel that the recovery has been overdone.

Substantial weakness was also visible among energy stocks, which moved sharply lower along with the price of crude oil. Crude for October delivery plunged $3.01 to $36.76 a barrel amid concerns about the outlook for demand.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plummeted by 5.8 percent, while the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index tumbled by 4.2 percent and 4.1 percent, respectively.

Semiconductor, software and financial stocks also saw considerable weakness, moving lower along with most of the other major secotrs.

Commodity, Currency Markets

Crude oil futures are rising $0.82 to $37.58 a barrel after plummeting $3.01 to $36.76 a barrel on Tuesday. Meanwhile, an ounce of gold is trading at $1,941.60, down $1.60 compared to the previous session’s close of $1,943.20. On Tuesday, gold climbed $8.90.

On the currency front, the U.S. dollar is trading at 106.17 yen compared to the 106.03 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1809 compared to yesterday’s $1.1778.

Asia

Asian stocks fell on Wednesday following an overnight rout in technology stocks on Wall Street. Worries that a highly anticipated coronavirus vaccine candidate being developed by drug maker AstraZeneca and the University of Oxford could be delayed also weighed on the markets. AstraZeneca reportedly paused the vaccine trial following an adverse reaction in a trial participant.

Shares in China and Hong Kong closed lower after another strong round of selling in technology stocks on Wall Street. China's Shanghai Composite Index declined 61.79 points, or 1.9 percent, to close at 3,254.63, while Hong Kong's Hang Seng Index fell 155.41 points, or 0.6 percent, to 24,468.93.

Japanese shares also declined, with the stronger safe-haven yen weighing on export stocks. The benchmark Nikkei 225 Index slumped 241.59 points, or 1.0 percent, to 23,032.54, while the broader Topix lost 15.49 points, or 1.0 percent, to close at 1,605.40.

Market heavyweight SoftBank Group Corp. slipped 2.9 percent amid worries about its exposure to U.S. tech stocks, while Fast Retailing declined 1.1 percent. Sony dropped 1.9 percent.

The Australian market closed at a more than two-month low after two straight days of gains. The benchmark S&P/ASX 200 Index lost 129.20 points, or 2.2 percent, to close at 5,878.60, its lowest since June 29. The broader All Ordinaries Index tumbled 131.30 points, or 2.1 percent, to settle at 6,058.90.

Among oil stocks, Oil Search plunged 7.8 percent, Santos fell 5.4 percent and Woodside Petroleum lost 4.4 percent after crude oil prices fell to nearly three-month lows overnight.

Tech stocks followed their U.S. peers lower. Appen slumped 4.1 percent, WiseTech Global dropped 1.9 percent and Afterpay declined 1.3 percent.

Among the major miners, Fortescue Metals dipped 2.7 percent, BHP Group declined 1.7 percent and Rio Tinto edged down 0.2 percent.

In economic news, the Australian Bureau of Statistics said that the value of owner-occupied home loans in Australia climbed a seasonally adjusted 10.7 percent on month in July, coming in at A$14.33 billion. That follows the 5.5 percent gain in June.

Seoul stocks also fell after two days of gains. The benchmark Kospi declined 26.10 points, or 1.1 percent, to close at 2,375.81.

Market bellwether Samsung Electronics dipped 0.5 percent and chipmaker SK Hynix dropped 2.6 percent.

Europe

European markets have moved to the upside on the day, as stocks rebound from recent losses after Nasdaq futures bounced back and oil prices recovered after a terrible setback in the previous session.

The mood is a bit cautious, with investors looking ahead to the European Central Bank's monetary policy decision on Thursday. Markets are waiting to know the central bank's take on inflation and whether it plans to check the euro's charge.

The ECB is unlikely to announce any big changes to its policy but might well indicate that it is prepared to loosen policy if required.

A weaker Sterling is supporting British stocks, although travel-related stocks are struggling due to rising coronavirus cases in Europe.

While the French CAC 40 Index has advanced by 0.9 percent, the U.K.’s FTSE 100 Index and the German DAX Index are up by 1.1 percent and 1.2 percent, respectively.

AstraZeneca has moved lower after the company announced that it has put a hold on its coronavirus vaccine trials due to safety-concerns. The company said it has halted its late-stage COVID-19 vaccine trial due to a potentially unexplained illness in a U.K. volunteer.

In economic news, Switzerland's unemployment rate remained unchanged in August, data from the State Secretariat for Economic Affairs, or SECO, showed. The jobless rate came in at a seasonally adjusted 3.4 percent in August, the same as seen in July and in line with economists' expectations.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of its auction of $35 billion worth of ten-year notes at 1 pm ET.

Stocks In Focus

Shares of Peloton (PTON) are moving significantly higher in pre-market trading after both Cowen and Goldman Sachs raised their price targets on the exercise equipment maker’s stock to $110 per share.

Industrial distributor HD Supply (HDS) is also likely to move to the upside after reporting fiscal second quarter earnings that exceeded analyst estimates.

On the other hand, shares of Tiffany (TIF) are likely to come under pressure after French luxury goods giant LVMH said it would not be able to complete its planned $16 billion takeover of the jeweler.
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