The U.S. stock market struggled on Tuesday. Both the Dow and S&P 500 gave up a large chunk of Monday’s gains, and even the Nasdaq caved to pressure in late afternoon trading.
Better than expected jobs data had little effect on a market warily eyeing an elevated VIX. Losses could have been worse were it not for Walmart’s incredible 7% surge.
Extending a recent trend, the Nasdaq was the strongest of the major Wall Street indices, though it eventually joined the Dow and S&P 500 in the red.
Here’s where the three stock market bellwethers stood at 3:32 pm ET:
Economic data once again showed the U.S. job situation improving, as JOLTS openings increased more than forecast.
Unfortunately, there is a healthy dose of skepticism surrounding the sustainability of the labor market rebound. Virus cases continue to rise in the U.S., and a second wave of lockdowns could hamper the recovery.
This thesis found support in comments from the Federal Reserve’s Raphael Bostic, who made it clear the Fed sees economic activity starting to level off.
Stock market bulls have reveled in the dramatic upswing in consumer sentiment. That upswing might not last. With enhanced unemployment benefits set to expire this month, household spending could contract dramatically.
This is probably the reason that the Republican party is softening on the idea of more stimulus payments for U.S. citizens.
From a more fundamental perspective, investors are no doubt eyeing some rather frothy valuations.
Dramatic moves in the U.S. stock market have launched the VIX (volatility index) back into an elevated trend.
Chris Beauchamp, chief market analyst at IG, believes that this will be a persistent concern for investors throughout the remainder of the week:
Adding to the potential hurdles is a rise in the Vix, which is back above 30 this morning after heavy declines in late June. It looks like we are set for a tougher week than the one just gone, when equities enjoyed healthy gains despite rising case numbers in the U.S.
It’s hard to imagine volatility will let up anytime soon.
As the November election approaches, Wall Street is finding it increasingly difficult to ignore the colossal polling lead that Joe Biden has built.
The gap between Biden and Trump dwarfs the slender lead Hilary Clinton enjoyed in the 2016 election.
Given this climate, it seems unlikely that there won’t be further volatility on the horizon for the remainder of 2020.
On a rocky day for the Dow 30, only a handful of stocks were in the green.
Leading the way was an impressive 7% rally from Walmart, which boomed on news its “Walmart+” service is launching in July.
Billed as their counter to Amazon Prime, the service has investors unusually excited. Moves this pronounced are rare in low-growth mega-cap stocks like WMT.
Apple and Microsoft both trended sideways. The tech sector remains relatively resilient to risk-off sentiment. Nasdaq hero Tesla touched above $1,400 per share for the first time.
Boeing, Goldman Sachs, and American Express were the worst hit members of the Dow Jones. All three stocks tumbled more than 3.75%.