So far, so September

  • Stocks extend losing streak, tech stocks lead the way
  • Small caps hang tough, oil rally fuels energy sector rebound
  • This week: IPOs, Powell testimony, and more housing data

The US stock market now has eight trading days to avoid adding to September’s bearish reputation.

What looked like a breakeven week last Thursday turned into a loser after bears took charge on Friday, sending the SPX to a third-consecutive losing week for the first time since October 2019 and running September’s loss to more than 5%:

Chart 1: S&P 500 (SPX), 7/24/20–9/18/20. S&P 500 (SPX) price chart. Post-FOMC slump.

Source: Power E*TRADE

The headline: Stocks extend slump as tech correction resumes.

The fine print: The Nasdaq 100 (NDX) tech index got out of the gate quickly last week with a solid Monday-Tuesday rally, but gave back all its gains by Friday to fall back into correction territory and register its first three-week losing streak since August 2019.

The number: $70.4 billion, Snowflake’s (SNOW) market cap at the end of its first day of trading last Wednesday, when it closed at $253.93—more than double its expected IPO price.

The quote: “I certainly would not say that we’re out of ammo.” Fed Chairman Jerome Powell, citing lending, asset purchases, and forward guidance as tools the Federal Reserve can employ to support the economy.1 The market initially rallied after Wednesday’s FOMC announcement, which made the case for years of near-zero interest rates, but reversed to close lower on the day.

The scorecard: Despite losses for the SPX, NDX, and Dow, the small-cap Russell 2000 (RUT) notched its second-best week of the past two months:

US stock index performance table for week ending 9/18/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE

Sector roundup: The strongest S&P 500 sectors last week were energy (+3%), industrials (+1.6%), and materials (+1%). The weakest sectors were consumer discretionary (-2.4%), communication services (-2.3%), and consumer staples (-1.7%).

Highlight reel: On Monday, Immunomedics (IMMU) soared 98% to $83.65 on news Gilead (GILD) was buying it. On the downside, Dave & Busters (PLAY) slid 26% to $14.12 on Thursday.

Futures action: November WTI crude oil (CLX0) posted its biggest up week in months, rallying to a two-week high of $41.72/barrel on Friday. October gold (GCV0) continued to flatline, trading between $1,932.20–$1,975.40/ounce last week, and closing Friday toward the middle of that range.

Last week's biggest futures up moves: October RBOB gasoline (RBV0) +12.6%, October WTI crude oil (CLV0) +9.5%, Brent crude oil (BX0) +7.9%. Last week's biggest futures down moves: December coffee (KCZ0) -11.5%, November lumber (LBSX0) -14.3%, October natural gas (NGV0) -9.7%.

Coming this week

Along with the month’s final housing market numbers, Fed Chairman Jerome Powell will sit down for three days of Congressional testimony:

Monday: Chicago Fed National Activity Index

Tuesday: Existing Home Sales, Powell testimony

Wednesday: Mortgage Applications, House Price Index, Powell testimony

Thursday: Jobless Claims, New Home Sales, Powell testimony

Friday: Durable Goods Orders

This week’s earnings include:

Monday: Comtech Telecommunications (CMTL), Ennis (EBF)

Tuesday: AutoZone (AZO), Neogen (NEOG), Stitch Fix (SFIX), KB Home (KBH), Nike (NKE)

Wednesday: JinkoSolar (JKS), Cintas (CTAS), General Mills (GIS)

Thursday: Accenture (ACN), Carnival (CUK), CarMax (KMX), Scholastic (SCHL), Costco (COST), Darden Restaurants (DRI), (TCOM), Jabil (JBL)

This week’s IPOs include:

Wednesday: GoodRx Holdings (GDRX), Corsair Gaming (CRSR), Bentley Systems (BSY).

Go to the E*TRADE market calendar (login required) for an up-to-date earnings schedule and a complete list of splits, dividends, IPOs, and economic reports. The Active Trader Commentary also lists earnings announcements, IPOs and economic report times each morning.

Market Mover Update: Homebuilding stocks bucked Friday’s mushy trading with solid gains. KB Home gained more than 2% intraday to match a seven-month high of $39.43. Tiffany (TIF) closed out the week with a 1%-plus gain as it continued to try to stabilize after its deal with LVMH fell through.

Finally, “quadruple witching” expiration seemed to live up to its reputation on Friday, but it was actually a bit out of character.

These quarterly expirations—when stock options, index options, stock-index futures, and single-stock futures (remember those?) all go off the books—have long been associated with heightened volatility, but recent history doesn’t back that up. Over the past 11 years, the SPX has actually been slightly less volatile on quadruple-witching expirations than it’s been on other days.2 Go figure.


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1 A recap of Fed Chief Powell’s market-moving comments on rates & inflation. 9/16/20.

2 Based on S&P 500 (SPX) daily prices, 12/18/09–6/19/20. Supporting document available upon request.

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