Melt Down

U.S. markets in steepest sell off since March as the virus resurfaces as economies falter.

Read in Browser   The Market Sum | Insight after the bell By Caleb Silver, Editor in Chief Thursday's Headlines 1. US markets sell off as virus resurgence fears take hold 2. Every sector of the S&P 500 in the red 3. 1.5 million Americans filed for unemployment last week 4. Recovery rally extinguished for sectors with momentum Markets Closed Dow 25,128.17 −1,861.82 (-6.90%) S&P 3,002.10 −188.04 (-5.89%) Nasdaq 9,492.73 −527.62 (-5.27%) VIX 40.6 +13.03 (+47.26%) Bitcoin $9,273.21 −$597.20 (-6.05%) US 10-Yr Yield 0.653 −0.095 (-12.70%)     Image courtesy Dave Carr/Getty   Markets Today It's been about three months since our last face-ripping sell-off (technical term), but we got one today. The selling was indiscriminate and viscous, and it worsened as the day went on. By the close, the DJIA shed 6.9%, while the Nasdaq and S&P 500 fell 5.2% and 5.7%, respectively. Oil plunged 10%, and gold climbed 12%. Volatility, as measured by the VIX, spiked 50%. It was one of those days, and it seemed overdue.   Equity markets have been rolling over the past two weeks after melting up in May in one of the greatest recoveries in history. There was a growing drumbeat that the market had come too far, too fast, given the economic realities facing the U.S. and every other economy on the planet. Last Friday's May jobs report may have lulled investors into a false sense of security as markets plowed higher.    That all seemed to fade yesterday as Fed Chair Jay Powell vocalized the Fed's fears about the uncertainty of the recovery and the troubling unemployment rate. Add to that a resurgence in COVID-19 cases in states like Arizona and Texas that seemed to have the virus under control, and sentiment has clearly melted.    Today's sell-off was reminiscent of those in March. Given the spike in volatility, this tantrum is not even close to being complete.     [NEW READER SURVEY: As promised, we are running another two-week survey of our U.S.-based readers to gauge your sentiment and see what moves, if any, you have been making with your money given the market recovery. We'll share the results, as always, and we thank you for your time and participation.]   Headlines: Another 1.54 million Americans filed for unemployment benefits in the week ending June 6. This was slightly lower than analysts expected and down 355,000 from the previous week. Initial jobless claims have decelerated for 10 consecutive weeks. The total number of initial claims for the last 12 weeks is 44 million. Continuing claims were at 20.93 million in the week ending May 30. Debt surged and household net worth tumbled in the first three months of the year as the initial impact of the coronavirus pandemic hit, according to Federal Reserve data released Thursday. Total domestic nonfinancial debt jumped by 11.7% to $55.9 trillion, the Fed said in its quarterly statement on domestic financial accounts. Debt had increased by 3.2% in Q4 of 2019. Disneyland park and Disney California Adventure park will reopen on July 17, the 65th anniversary of Disneyland opening. A theme park reservation system will be used, and parades, meet and greets, and nighttime spectaculars will be cancelled. Hotels will reopen on July 23. These plans are dependent on state and local government approvals. Lufthansa says it will cut 22,000 jobs as it struggles to deal with the slump in air travel caused by the coronavirus pandemic. The carrier predicted a slow recovery in demand and expected to have about 100 fewer aircraft after the crisis. Regeneron Pharmaceuticals has begun the first clinical trial of its investigational dual antibody drug for the prevention and treatment of COVID-19. It is designed to also help protect against viral escape (mutant forms of the virus that evade the therapeutic's blocking action).  Dutch company Just Eat Takeaway is gobbling up Grubhub in an all-stock transaction worth $7.3 billion. The combined group is the world's largest online food delivery company outside of China and processed approx. 593 million orders in 2019, with more than 70 million combined active customers globally. Uber reportedly offered Grubhub shareholders a higher amount. Amazon is stopping police use of its facial recognition technology for one year. "We've advocated that governments should put in place stronger regulations to govern the ethical use of facial recognition technology, and in recent days, Congress appears ready to take on this challenge," it said in a blog post. The European Union plans to file formal antitrust charges against Amazon over the e-commerce company's treatment of third-party sellers, according to The Wall Street Journal. The charges could be officially filed as early as next week. Delta said in a filing that it expects Q2 revenue to be down 90% year-over-year and is negotiating with lenders to avoid defaulting. American Airlines told shareholders it expects to fly 40% of its total pre-coronavirus capacity in July and its cash burn rate is down to $40 million per day this month. U.S. airlines flew 3 million people in April, a 96% drop from last year and the lowest since 1974, according to the Transportation Department.     The Sentiment Shift We'll likely look back at June 8th as the day sentiment shifted away from risk as equity investors started selling all the things they bought on sale in May. The big tech stocks dodged most of it as they have become the unofficial utility stocks of this pandemic, but even that changed this week.    Any sector that had been rallying in the fading hopes of a V-shaped recovery was sold, and sold hard.    Here are the big banks:    chart courtesy YCharts     Travel Stocks Grounded Airline and cruise stocks, two of the most punished sectors in the shutdown, had been on the rise as economies reopened and travel bookings came back to life. That rally was extinguished today, as well:   chart courtesy YCharts     Retailers Go on Sale Retail stocks, besides Home Depot and Walmart, have had a terrible 2020. Discretionary spending is not top of mind or wallet for consumers, given the fact that 43 million Americans have lost their jobs in the past 11 weeks, and belts are tightening everywhere. Many, like JCPenney and J. Crew, have filed for bankruptcy protection. Those that have not are facing enormous challenges as malls remain closed or practice social distancing, and consumers are only spending on the basics.    Here's what happened in the retail sector of the stock market today:   chart courtesy YCharts     What's Next? Trends tend to stay in motion until their course is altered by news or an unforeseen development that changes sentiment. We have been riding a wave of positive sentiment for the past six weeks as good news on vaccines and the reopening of global economies emboldened investors to take on more risk.    We haven't had really good vaccine news in awhile, and the unemployment numbers continue to belie a robust recovery. If we see more spikes in a resurgence of the virus, silence on the vaccine front, and more jobless claims, this will be our trend for awhile. More News: Trademarks of a Takeover Target Top Beer Stocks for Q3 2020 Top Pharmaceutical Stocks for Q3 2020 SPONSORED BY DIREXION The Flight to Safety in Turbulent Times 2020 has brought new headline risks for investors to absorb. Direxion takes a close look at what this means for investors and the best ways to mitigate risks. Learn More  > (chart courtesy YCHARTS)     Shares of Kroger rose by 1.5% following an announcement that Roku will be partnering with the grocery store chain to improve its targeted advertising capabilities. Take-Two Interactive suffered the smallest loss, only 0.23%. Earlier today the video game company received a reiterated Buy rating from SunTrust Robinson Humphrey.     Shares of ONEOK fell 16.5% following a public offering of 26 million shares, representing 6.3% of the natural gas company's outstanding shares, and a downgrade from Buy to Neutral by Bank of America. Oil stocks, such as Occidental Petroleum (16%) and Halliburton (15.5%), are down after the commodity's price dropped amid a new wave of coronavirus cases and rising crude inventories. Word of the Day Gapping Gapping is when a stock, or another trading instrument, opens above or below the previous day's close with no trading activity in between. Partial gapping occurs when the opening price is higher or lower than the previous day's close but within the previous day's price range. Full gapping occurs when the open is outside of the previous day's range. Gapping, especially a full gap, shows a strong shift in sentiment occurred overnight.   You could say we gapped way down, today.     Image courtesy Heritage Images/Getty   Today in History June 11, 1930: Trying to rebuild public confidence in the market, New York Stock Exchange President Richard Whitney has the press witness him making a bid (with his own money) of $160 a share for a 60,000-share block of U.S. Steel stock. Shortly thereafter the stock sank below $150, on its way to $21 in the market bottom of 1932. Whitey was later charged with stealing $3 million, and he was dubbed "The Wolf of Wall Street."   Barrie A. Wigmore, The Crash and Its Aftermath: A History of Securities Markets in the United States, 1929–1933. Want more Investopedia market news? Sign Up for 'The Express' Get more market insights and financial headlines before the opening bell. Make your mornings more enjoyable, for free. Check it out » How can we improve the Market Sum? Tell us at marketsum@investopedia.com CONNECT WITH INVESTOPEDIA Email sent to:  mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here.   114 West 41st St, floor 8 New York NY 10036 © 2020, Investopedia, LLC. All Rights Reserved | Privacy Policy