Stocks are giving back some of the gains from April. It is actually not a big surprise given that stocks had gained at least 35% since hitting the low set on March 23.
Elon Musk was at it again, this time with a tweet that said he thinks “TSLA stock is too high IMO.” That not only shaved $90 or 11.5% off TSLA’s stock price, it helped take the overall market lower.
At midday the Dow is off almost 600 and the major indices have fallen back down to previous resistance levels. Breadth has turned decidedly negative with the decliner out pacing advancers 6 to 1 on the NYSE and 5-to-1 on the Nasdaq.
Break Out Points | Initial Resistance | Current | Major Breakout |
S&P 500 | 2,882 | 2,827 | 3,130 |
Dow Jones Industrial Average | 23,876 | 23,742 | 24,242 |
NASDAQ Composite | 8,650 | 8,582 | 9,018 |
All eleven S&P 500 sectors are in the red, with March’s best performer, Energy, performing the worst today.
S&P 500 Index | -2.77% |
Communication Services (XLC) | -2.15% |
Consumer Discretionary (XLY) | -4.19% |
Consumer Staples (XLP) | -0.64% |
Energy (XLE) | -5.82% |
Financials (XLF) | -3.69% |
Health Care (XLV) | -2.62% |
Industrials (XLI) | -3.47% |
Materials (XLB) | -2.68% |
Real Estate (XLRE) | -3.18% |
Technology (XLK) | -2.81% |
Utilities (XLU) | -2.45% |
Speaking of Energy, President Trump signed an executive order banning the purchase and installation of some foreign parts and equipment used by power plants. The order will give the Energy Secretary more authority to protect the grid from those that pose an “unacceptable risk to national security.” Many agencies many have argued that the U.S. electricity grid is a tempting target for hackers. Energy Secretary Dan Brouillette stated, “It is imperative the bulk-power system be secured against exploitation and attacks by foreign threats.” The order will “greatly diminish the ability of foreign adversaries to target our critical electric infrastructure,” he added.
Economic News
ISM Manufacturing Index for April decreased to 41.5, beating the estimate of 39, but down from March’s read of 49.1. The beat was mainly due to an increase in supplier deliveries from supply chain disruptions as well as an increase in inventories due to weak demand. Despite the beat, it was the lowest reading since April 2009. Sixteen of the 18 industries reported declines. However, the ISM indicated that they see a bottom in sight as uncertainty from Covid-19 begins to wane.
To see the chart, click here.
- New Orders Index declined to 27.1% from 42.2%, lowest since December 2008
- Production Index dropped to 27.5% from 43.8%, lowest since inception of records in January 1948
- Employment Index fell to 27.5% from 43.8%, lowest r since June 1949
- Backlog of Orders Index decreased to 37.8% from 45.9%, lowest since March 2009
- Prices Index slipped to 35.3% from 37.4%, the lowest since January 2016
In March, construction spending increased 0.9% month over month from 2.5% decline in February. Residential spending was up 2.3% while nonresidential spending declined 0.1%. Total private construction spending increased 0.7%. Total public construction spending rose 1.6% driven (pun intended) by highway and street spending. As the report is from March, we will have to see how April construction spending has been impacted from the Coronavirus.
Have a good weekend. Be safe, stay well, and remain positive.
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