Stocks Pull Back as Investors Book Summer Gains, The U.S. Crosses the 19th Anniversary of September 11, 2001
Weekly Update – September 11, 2020
The S&P 500 index fell 2.5% last week, marking the benchmark’s second weekly drop in a row, as investors continued pulling back from the riskier holdings that had led many of the market’s summer gains.
The S&P 500 ended the week at 3,340.97, down from last week’s closing level of 3,426.96. The index is now down 6.9% from its record intraday high of 3,588.11 reached Sept. 2. However, it is still up 9.9% over the past three months and up 3.4% for the year to date.
This week’s drop came as investors have been losing confidence in the strength and sustainability of the market gains posted in recent months, especially as the COVID-19 pandemic continues to impact the economy and Congress remains at a standstill over a stimulus plan. Investors were also concerned by comments from President Donald Trump that he is considering a “decoupling” of the US and Chinese economies.
The energy and technology sectors, which had been among the strongest sectors when the market was rallying in recent months, are now suffering the largest hits. The energy sector had the biggest percentage drop of the week, down 6.5%, followed by technology, which slipped 4.4%.
Among the other decliners, communication services fell 3.2%, financials fell 2.3% and consumer discretionary shed 0.7%.
Just one of the S&P 500’s sectors managed to post a gain this week: materials, which edged up 1%.
The energy sector’s decline came as crude-oil futures tumbled amid data showing the first weekly increase in crude oil inventories in seven weeks. Demand for crude was hurt not only by the pandemic but also by hurricane activity. Among the decliners, shares of Occidental Petroleum (OXY) shed 17% while Apache (APA) fell 19%.
In the technology sector, decliners this week included Apple (AAPL), which lost 7.4%, as well as salesforce.com (CRM), down 4.6%. The stocks are still up 32% and 39%, respectively, over the past three months.
Shares of Adobe (ADBE) slipped 4.2% even as analysts at firms including UBS and RBC Capital Markets were raising their price targets on the stock ahead of the company’s fiscal Q3 report to be released Tuesday.
On the upside, the materials sector’s gainers included Sherwin-Williams (SHW), whose shares rose 4.3% since last Friday as BMO Capital Markets upgraded its investment rating on the stock to outperform from market perform. The firm also raised its price target on the shares to $790 each from $674. KeyBanc also initiated coverage of Sherwin-Williams (SHW) shares this week with an overweight investment rating and a price target of $805.
Also coming Tuesday, industrial production and capacity utilization for August will be released, followed by August retail sales and July business inventories Wednesday. Thursday’s economic calendar features housing data, with August housing starts and building permits due, while Friday will include the preliminary August reading on consumer sentiment from the University of Michigan.