US Markets

Stocks close lower; S&P posts 8-day losing streak amid US election fears

Closing Bell Exchange: Investors shouldn't fear the market

U.S. stocks closed lower on Thursday, with information technology led decliners, as concerns over the presidential election lingered.

Investors "look at Donald Trump as the great unknown," said Robert Pavlik, chief market strategist at Boston Private Wealth. "Hillary Clinton, while not business friendly, is certainly market friendly."

"This is all about the election and the breaking of technical support," he said. "People are now thinking the 200-day moving average is in play" on the S&P 500, around 2,082.

The Dow Jones industrial average fell about 25 points, with Apple contributing the most losses. The S&P 500 fell 0.4 percent, with information technology and health care dropping 1 percent. The Nasdaq composite underperformed, falling about 1 percent. Earlier, the three major indexes traded higher.

Financial markets across the globe have remained skittish since Friday, when news that the FBI was investigating new emails related to Democratic nominee Hillary Clinton broke. Market participants had largely priced in a Clinton victory over her Republican counterpart Donald Trump.

"It's hard to saw what the main drivers are here," said Art Hogan, chief market strategist at Wunderlich Securities. "You've got economic data that's been better on balance, except today, but you don't have any more clarity on the election." "We're becoming less certain about this and we don't know what to do about it."

Since Friday, the CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, has gained more than 21 percent. On Thursday, the so-called fear gauge gained around 14.4 percent, to trade near 22.10.

"Investors are wondering whether they can trade on the election. They can't; there's just too much uncertainty," said Tim Dreiling, regional investment director at The Private Client Reserve of U.S. Bank.

Peter Cardillo, chief market economist at First Standard Financial, said the market was trying to make gains earlier, as the S&P tried to snap a seven-day decline, but "we're not out of the woods yet."

Traders work on the floor of the New York Stock Exchange.
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The S&P closed lower for the seventh straight day on Wednesday, notching its longest daily losing streak in five years, and extended it to eight on Thursday. "This comes at a time where sentiment is fearful, setting up the market for a rebound," Katie Stockton chief technical strategist at BTIG, adding that key technical indicators "are also showing signs of downside exhaustion, including a new counter-trend 'buy' signal on the chart of the Dow Jones industrial average."

Kate Warne, investment strategist at Edward Jones, said that while an eight-day losing streak in the S&P is "a scary headline, investors shouldn't put much weight behind it." She said investors need to keep in mind that the losses over the streak have been relatively small.

Investors also digested a slew of economic data on Thursday Initial jobless claims came in at 265,000, above a consensus estimate of 258,000. Also, the preliminary read on third-quarter productivity showed an increase of 3.1 percent, well above the expected rise of 2 percent. Other data released Thursday included the ISM non-manufacturing index for October, which came in below expectations. Factory orders, meanwhile, rose for a third straight month.

Investors were also waiting on the October jobs report, scheduled for release Friday at 8:30 a.m. ET. Economist polled by Reuters expect the U.S. economy to have added 175,000 jobs last month.

On the earnings front, Chesapeake was among the firms reporting results before the bell. Social media giant Facebook posted better-than-expected results Wednesday after the close. That said, the stock fell 5.7 percent Thursday, as the firm indicated its ad load could "come down meaningfully" next year.

"Anytime you've got a company growing really quickly, there is a concern over when is a slowdown coming and how long it's going to be," Edward Jones' Warne said.

According to data compiled by The Earnings Scout, earnings have not been as good as they were in previous weeks. Entering Monday, 73 percent of the 289 S&P components that posted results had exceeded bottom-line estimates, whereas just 66 percent of the 104 components reporting this week have beaten expectations. The spread between Clinton and Trump has also narrowed significantly since Friday, according to data from RealClearPolitics.

In currencies, the dollar traded lower, with the euro near $1.111 and the around 103. The British pound shot up more than 1 percent against the dollar after the Bank of England raised its GDP and inflation forecasts. Sterling also caught a bid from a British High Court ruling, which said parliament would have to approve the invocation of Article 50, which would trigger the Brexit process.

Sovereign bond yields around the globe rose after the BOE released its improved forecast, with the benchmark U.S. Treasury yield trading around 1.81 percent and 10-year German bunds yielding around 0.16 percent.

Major U.S. Indexes

The Dow Jones industrial average fell 28.97 points, or 0.16 percent, to end at 17,930.67, with Pfizer leading decliners and Disney the top advancer.

The slipped 9.28 points, or 0.44 percent to close at 2,088.66, with information technology leading eight sectors lower and energy the top advancer.

The Nasdaq fell 47.16 points, or 0.92 percent to 5,058.41.

About nine stocks declined for every five advancers at the New York Stock Exchange, with an exchange volume of 891.03 million and a composite volume of 3.831 billion at the close.

U.S. crude futures for December delivery fell 1.5 percent to settle at $44.66 per barrel. Gold futures for December delivery fell $4.90 to settle at $1,303.30 per ounce.

On tap this week:


Earnings: Kraft Heinz, CBS, Starbucks, Las Vegas Sands, Activision Blizzard, Credit Suisse, Cigna, Encana, Adidas, AMC Networks, Church and Dwight, Chesapeake Energy, Fortress Investments, S&P Global, Scotts Miracle-Gro, Hyatt, Pinnacle West, Time Inc,G FireEye, GoPro, Fossil, Ambac, Twilio, Weight Watchers, Noodles and Co, Lions Gate, TrueCar, TiVo, Skyworks, El Pollo Loco

9:45 a.m. Services PMI

10:00 a.m. ISM nonmanufacturing

10:00 a.m. Factory orders


Earnings: Humana, Duke Energy, Madison Square Garden, Shutterstock, Centerpoint, AES, NRG Energy, Regeneron, Virtu Financial

8:30 a.m. Employment report

8:30 a.m. International trade

4:00 p.m. Fed Vice Chairman Stanley Fischer at IMF on policy changes after great recession