Highlights
Equities seesawed to end mostly lower Thursday as the market remained in risk-off mode and concerns multiplied about a global slowdown. The Dow Jones industrial average edged up 0.2 percent, the S&P 500 lost 0.5 percent and the Nasdaq fell by 0.9 percent. Bond yields and the dollar declined while oil prices rose.
Megacaps suffered another selloff on top of Wednesday's big drop after a morning rebound try faltered. Wednesday's losses, which pushed the Nasdaq down 3.6 percent, came after the market reacted badly to quarterly results from Alphabet and Tesla. The Alphabet news rattled investors who have piled into trades based on hopes for an artificial intelligence boom. The EV maker bounced back by 2.0 percent Thursday while Alphabet lost another 3.0 percent.
Risk-off sentiment Thursday reflected more disappointing earnings news, an unexpected Chinese rate cut which suggested authorities are deeply concerned by China's slowdown, plus more downside surprises in French and German economic data. This fed concerns that the U.S. and global economies have slowed dramatically. Global de-risking saw unwinding of yen carry trades with switching into dollars and U.S. Treasuries out of risk assets of all kinds.
Surprisingly strong U.S. gross domestic product figures stemmed the risk-off trade briefly, and U.S. Treasury yields moved off their lows while equities tried for a rally, but de-risking resumed through the afternoon and the major indexes ended near the day's lows. Among sectors, worst performers included information technology, communications services, health care, real estate and utilities. Best were industrials, energy, materials, consumer staples, and financials. Small cap stocks resumed their recent outperformance at the expense of big technology and megacaps.
Megacaps suffered another selloff on top of Wednesday's big drop after a morning rebound try faltered. Wednesday's losses, which pushed the Nasdaq down 3.6 percent, came after the market reacted badly to quarterly results from Alphabet and Tesla. The Alphabet news rattled investors who have piled into trades based on hopes for an artificial intelligence boom. The EV maker bounced back by 2.0 percent Thursday while Alphabet lost another 3.0 percent.
Risk-off sentiment Thursday reflected more disappointing earnings news, an unexpected Chinese rate cut which suggested authorities are deeply concerned by China's slowdown, plus more downside surprises in French and German economic data. This fed concerns that the U.S. and global economies have slowed dramatically. Global de-risking saw unwinding of yen carry trades with switching into dollars and U.S. Treasuries out of risk assets of all kinds.
Surprisingly strong U.S. gross domestic product figures stemmed the risk-off trade briefly, and U.S. Treasury yields moved off their lows while equities tried for a rally, but de-risking resumed through the afternoon and the major indexes ended near the day's lows. Among sectors, worst performers included information technology, communications services, health care, real estate and utilities. Best were industrials, energy, materials, consumer staples, and financials. Small cap stocks resumed their recent outperformance at the expense of big technology and megacaps.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
