Dow Ends Off Lows as Bulls Find Solace in Value Stocks

imageStock Markets13 hours ago (Oct 15, 2020 04:09PM ET)

(C) Reuters.

By Yasin Ebrahim – The Dow pared losses Thursday, as big tech cut losses and value stocks shined despite uncertainty over stimulus.

The Dow Jones Industrial Average fell 0.07%, or 20 points. The S&P 500 was down 0.13%, while the Nasdaq Composite slumped 0.47%.

Value stocks proved an unlikely source of optimism for investors as financials, industrials and energy attracted bids offsetting weakness in tech.

The Fab 5 had weighed on the broader tech sector, before paring some losses even as analysts warned of a choppy month ahead.

“[O]ur optics still suggest a choppy bottoming process in the October-November timeframe with a floor around/above 3050-3150 SPX,” Technical Strategist Dan Wantrobski said.

Apple (NASDAQ:AAPL), (NASDAQ:AMZN), Facebook (NASDAQ:FB), Google-parent Alphabet (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) traded in the red.

Investor sentiment was hurt intraday by data suggesting the resilience seen in the labor market could start to give way without further stimulus to support the broader economy.

The Labor Department said 898,000 Americans filed for unemployment insurance, up 53,000 from the prior week’s 845,000. That was above economists’ estimates for 820,000 claims and the highest since Aug. 22.

“The bottom line here is that the state of the labor market is contingent on the virus picture, so we can’t rule out further increases, and at this point we’d regard a zero print for October payrolls as a decent result; a clear decline is entirely possible,” Pantheon Macroeconomics said.

A day after conceding that stimulus was unlikely to be rolled out before the Nov. 3 election, Treasury Secretary Steven Mnuchin said he would continue talks with House Speaker Nancy Pelosi on Thursday to resolve differences, particularly on funding for a national testing plan, which remains a sticking point.

Healthcare stocks were also among the biggest losers on the day, led by 20% slump in Vertex Pharmaceuticals (NASDAQ:VRTX) after it stopped testing on a protein deficient treatment amid safety concerns.

Walgreens Boots Alliance (NASDAQ:WBA) rose 5% after reporting better-than-expected quarterly results, underpinned by higher U.S. sales.

Elsewhere on the earnings front, United Airlines Holdings Inc (NASDAQ:UAL) slumped more than 4% after its second-quarter results, released late-Wednesday, fell short of Wall Street estimates as the pandemic continues to weigh on air travel.

In other news, cloud computing company Fastly (NYSE:FSLY) plunged 27% after trimming its third-quarter guidance, citing an uncertain geopolitical backdrop and lower-than-expected demand.

Zoom Video Communications (NASDAQ:ZM) ended at record highs, up 5%, after Bernstein hiked its price target on the stock to $611 from $228, citing optimism over new product releases.

Dow Ends Off Lows as Bulls Find Solace in Value Stocks

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