S&P 500 drops 60 points on a volatile day: Oil stocks fall sharply, Apple tech stocks fall again

S&P 500 Index (SNPINDEX: ^ SPX) Making its best yo-yo impression in the last one week. 67 points or 2%, leaving around 60 points after yesterday, with today’s time down by about 1.8%. This is the fourth session in the last five market days that the index, which accounts for about 80% of total US stock market capitalization, has gained or lost more than 1.75%.

This marks a week of high volatility mostly on the downside. Since the record 3,580.84 on September 2, the S&P 500 has lost about 7% of its value. Today’s sell-off, like most of this week’s volatility, was widespread, with the vast majority of 505 stocks at the bottom of the index. Many areas saw declines in stocks every day, and none of the regions benefited more than the losers.

Image Source: Getty Image

Today the most difficult sectors were energy and technology. Nine of the 10 worst performing stocks today were oil stocks EOG Resources (NYSE: All Images), Apache Corp (NASDAQ: APA), And Occasional petroleum (NYSE: OXY) All falling 8% or more. Trillion dollar tech giants Apple (NASDAQ: AAPL), Adventuress (NASDAQ: AMZN), And Microsoft (NASDAQ: MSFT) All lost 2.8% or more today. The released skid has 10% down three% from their highs this month.

Historically high unemployment weighs on stocks

Another week goes with record-breaking levels of unemployment claims. According to the US Department of Labor’s weekly unemployment report, 884,000 others filed initial unemployment claims last week. However this is well below the peak of nearly 7 million weekly first-time claims set at the end of March, as the former record would have been broken every single week.

Combine that with a high unemployment rate and a falling workforce participation rate that is the lowest in more than four decades, and the US economy remains deep into recession.

US Initial Claims for Unemployment Insurance Chart

US Initial Claims for Unemployment Insurance Data by YCharts

A combination of the Federal Reserve’s monetary and interest rate incentives as well as actions in the coronovirus epidemic, including financial support for families and businesses by the federal government, have helped lead to a rapid recovery in stocks from the March lows.

Tech stocks in particular have led the rally, with companies such as Microsoft and Amazon providing critical services and products that consumers and enterprises rely on to function, and Apple’s high-profit iPhone and related services The businesses have held up remarkably well.

For the past week, investors have started acquiring ants, selling Big Tech names and cashing in on large-scale stocks as conflicts continue under the specter of an ongoing global epidemic in other regions that many fear worsens Because summer turns into autumn.

Another hit to the oil patch sends falling oil stocks

Crude oil prices fell 2.5% today, with the leading benchmark West Texas Intermediate at $ 37.06 a barrel, following two weekly surveys reporting an increase of more than 2 million barrels of crude oil in commercial storage in the US last week. Total petroleum inventories, including refined products such as gasoline and diesel, fell to 3.4 million barrels last week, but the expectation was for a larger drop that did not happen.

Refinery activity also decreased in the summer as the industry transitioned from a peak demand season to a fall maintenance cycle. Distillate and gasoline production in the industry is seeing a double-digit drop in demand compared to the previous week, compared to the year before, compared to a year ago.

This is a bad news after last week’s pain when Saudi Arabia shifted its pricing power in the US oil market back to crude oil prices in the $ 30s.

News hits the energy sector hard: The Energy Select Sector SPDR ETF (NYSEMKT: XLE), Which invests in all 26 S&P 500 energy sector stocks, fell 3.6% today. The sector is down about 8% in the last one week.

^ SPX Chart

^ SPX data by YCharts

Independent oil producers have had their worst days, as these companies are most affected by weak demand and falling oil prices. Like services companies Haliburton (NYSE: HAL) And Schlumberger Are next in line, as they provide services to producers who are in very little demand in the current environment. Both companies saw their shares fall by 5% or more today.

Even refiners like it Marathon Petroleum (NYSE: MPC) And Phillips 66 (NYSE: PSX), Who are less exposed to lower oil prices, but are still affected by weak demand, took to the chin today, their shares fell more than 4% in today’s sales.

While refiners and well-capitalized service providers should have little trouble riding the oil recession, many producers are facing an economic climate they simply cannot survive. Without rebound in demand, Saudi Arabia is not going to close its boot. The throat of every marginal producer out there. And that includes a very US shale oil producers

buckle up

The first half of 2020 was one of the most volatile periods on record for the stock. And after a relatively calm summer, the past week has brought a swift return for big swings, both up and down. It is also providing a supercharged reminder that, while the stock has proven to be incredibly long-term wealth builders, they can be brutally painful for themselves in the short term.

For investors working with money they will count for living expenses over the next few years, which can prove disastrous; For investors looking to build their wealth well for their needs in the future, this extreme volatility is the stuff that can yield the best long-term gains.

Either way, investors should accept – even embrace – the reality that volatility is likely to remain, especially with economic and political uncertainty advancing people’s business decisions over weeks and months Huh.