Following yesterday’s drop across all three US indexes, today’s drop is even more harrowing, with the Dow Jones plunging by 527 points, the S&P 500 losing -1.74% and the Nasdaq sliding -1.59%.
Investors worried about a recession are pulling out of big tech stocks which are apparently leading the broader market decline. Bear in mind that Q3 earnings have begun, and during the last three months, among the 113 S&P companies that have issued earnings guidance, 82 of them have issued negative guidance.
This staggering number is led by the Tech sector. The number of tech companies issuing negative guidance has exceeded their 5-year average by 45% (according to FactSet). Strangely, the top performing industry within tech–Semiconductors–is almost single handedly responsible for the negative earnings guidance decline. Micron Technologies (MU) is at the top of that list. MU beat earnings and revenue in their fiscal Q4 reporting last week but they’re down by 86% in profits as of Q4 2018.
Yesterday, the ISM manufacturing index came in at its lowest level in over a decade. The September ADP employment report came in at 135,000, below economist expectations of 140,000. Expectations of a 25-basis point Fed rate cut on October 30 increased to 69% from a 40% probability just yesterday.
The VIX is up +1.72 (9.27%), Gold climbed +17.80, and Silver added +0.318.
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