U.S. equities moved lower again on Wednesday, pushing the major averages down to levels not seen since the middle of October. In the end, the Dow Jones Industrial Average lost 0.6%, the S&P 500 lost 0.6%, the Nasdaq Composite lost 0.5% and the Russell 2000 lost 0.5%. It was the second-straight loss for large caps and the fourth decline in the past five days.
Click to EnlargeTreasury bonds strengthened, the dollar weakened, gold lost 0.4%, and crude oil fell 0.7%. Breadth was negative with 1.8 decliners for every advancing issue.
Volume was slightly ahead of the NYSE’s 30-day average. Financials led the way with a 0.2% gain while energy was the laggard, down 1.2%.
Children’s Place (PLCE) gained 5.9% after reporting better-than-expected revenues and earnings on strong comp-store sales.
Dick’s Sporting Goods (DKS) gained 5% thanks to an upgrade from analysts at JPMorgan on the belief the company will be a survivor in the competitive sports goods sector. Alaska Air Group (ALK) gained 4.5% on an upgrade from Raymond James on valuations.
On the downside, Target (TGT) fell 9.9% despite beating quarterly estimates on weak forward guidance as management contends with intense competitive pressures. Grocer Kroger (KR) fell 1.9% after Amazon (AMZN) and Whole Foods announced lower prices on a range of grocery products including turkeys.
Click to Enlarge Core consumer price inflation increased to an annual rate of 1.8%, the strongest since April and confirming the increases suggested by the producer price inflation report on Tuesday. Separately, retail sales largely came in as expected.
Conclusion
The carnage in credit markets continues to be the focal point, with the iShares High Yield Corporate Bond ETF (HYG) touching its 200-day moving average this morning for the first time since April 2016.
That’s a big deal, representing a fixed-income vote of no confidence in the specter of a corporate tax cut coming out of Congress as well as the health of earnings and GDP growth moving into 2018 as the Federal Reserve keeps tightening policy.
A similar message was sent by the Treasury bond market, with long-term yields dropping again as prices rally. That pushed the Treasury yield curve to its flattest level since November 2007 — a strong signal that trouble is coming.
Check out Serge Berger’s Trade of the Day for Nov. 16.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
