Stocks Slaughtered as Nasdaq Sheds Almost 5%

Wall Street had a decisively ugly day, with the major indices trending lower throughout the session, despite the relatively flat start. The Nasdaq which outperformed during yesterday’s strong bounce got monkey-hammered, and the tech benchmark closed by more 4%, hitting a new multi-month low together with the Dow and the S&P 500.

S&P 500, 4-Hour Chart Analysis

The pipe bombs sent to several politicians and other prominent Democrats weighed heavily on sentiment and coupled with the continued European worries sent the stocks to a downward spiral. The S&P 500 closed near the 2650-2675 zone, which was very important during the latest deep correction. Small-caps continued to plunge too in the panicky sentiment, while risk-off flows pushed Treasuries, the Yen, and gold higher in the second half of the day.

Russell 2000 Index CFD, 4-Hour Chart Analysis

Even the Russell 2000 isn’t telling the whole story about the under-the-hood weakness, as although the main small-cap benchmark is now close to its February lows, the broader NYSE Composite hit a more than one-year low, as large-cap stocks are still much better off than the average. That’s likely the consequence of the dominant passive funds, but should broader trends shift negative, that effect could also reverse.

Boeing (BA), 4-Hour Chart Analysis

While today’s earnings reports were mixed, only a handful of stocks managed to withstand the selling pressure, with Boeing (BA) being the most important outlier. The company smashed the consensus estimate and its guidance was also enough to finish in the green even amid the heavy selling across sectors.

The other big names reporting, such as UPS (UPS) and AT&T (T), fell significantly after posting mixed numbers, while in Europe the all-time low in Deutsche Bank (DB) made huge waves.

Microsoft (MSFT) and Visa (V) both beat the estimates in after-hours US trading, and although the stocks are trading above their closing prices, the broader market only managed a weak bounce even after the panic of in the last hour of trading, and that doesn’t bode well for the overnight session.

Treasuries Extend Gains as Dollar Holds Strong

Treasury yields pulled pack heavily once again, as safe haven flows intensified, and as Trump said that he might regret appointing Powell as the Chairman of the Fed. The President already made it clear that he will the blame on the Fed should the market correction morph into a full-blown bear market, and that could put pressure on the central bank to adjust its tightening schedule towards a more dovish path down the road.

EUR/USD, 4-Hour Chart Analysis

Despite the pullback in yields and the huge miss in new home sales, the Dollar index held on to its gains and closed at a 2-month low, while the EUR/USD pair finished below 1.14 for the first time since August as well. While the Greenback lost ground against the Yen and the surging Canadian Dollar, the majority of risk-on currencies followed equities lower during the US session.

Tomorrow we are set for another tumultuous day across asset classes, with today’s stock rout and the general risk-off shift guaranteeing volatility, while the ECB’s meeting, and the US Durable Goods report, and the slew of corporate earnings providing the catalysts for further wild swings.

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Author:
Trader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.