September 24, 2020
The September selling continued yesterday with all three U.S. major stock indices experiencing steep declines. The Dow and S&P 500 dropped 525.05 and 78.65 points, or -1.92% and -2.37%, respectively. Again, the tech-heavy NASDAQ declined the most, losing 330.65 points, or -3.02%. Global stocks declined as well, with losses spanning from Europe to the Asian markets. In a rather unexpected move, gold dropped sharply and continues to decline today. “Unexpected” because gold is considered a fear asset, one in which investors seek security in an environment of civil, political or financial unrest.
“There wasn’t one specific reason to explain the selling, and in many ways the slump was a continuation of price action that’s been underway since the start of the month,” said Adam Crisafulli of Vital Knowledge. “Psychology around the group (technology) shifted and it’s no longer the stalwart source of support it once was.”
So far in September, the Dow has declined 5.8%, while the S&P 500 has lost 7.5%. The NASDAQ composite, which has been the strongest performer so far in 2020, has lost 9.7% as investor rotate away from the big tech names.
Federal Reserve Chairman Jerome Powell has made it clear to Congress that additional fiscal and monetary stimulus will be needed to fuel continued recovery in the U.S. economy. But Congress seems too mired down in a variety of other issues to address Powell’s plea. “We think it is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution,” Jan Hatzius, chief economist at Goldman Sachs. She continued, “any further fiscal stimulus will likely have to wait until 2021.
With a slightly weaker-than-expected jobless report this morning, the futures in the pre-market indicate the selling will continue on Wall Street today.