(New York) The New York Stock Exchange closed sharply lower on Thursday, with investors fleeing mega-cap stocks for the second straight session as uncertainties in U.S. politics begin to weigh.
The Dow Jones Industrial Average led the losses, dropping 1.29% to 40,665.02 points, the tech-heavy NASDAQ index fell 0.70% to 17,871.22 points and the S&P 500 declined 0.78% to 5,544.59 points.
Unlike the day before, when the NASDAQ had its worst session in almost two years, on Thursday it was the Dow Jones that fell the fastest, notably due to the fall of heavyweights in the index such as the bank JPMorgan (-3.18%), but also Goldman Sachs (also -3.18%).
“The market has been overbought for a while,” diagnosed Peter Cardillo of Spartan Capital, “but there is also a new political twist with Joe Biden potentially dropping out of office as early as the end of the weekend.”
“This may create some short-term anxiety related to the presidential election,” Cardillo added.
The 81-year-old Democratic president, who paused his campaign due to a mild case of COVID-19, is playing for his political survival as the tumult grows louder among Democrats for him to make way for another candidate in the election.
Even former President Barack Obama, to whom Biden was second, reportedly told people close to him that Joe Biden should reconsider running for president in November.
PHOTO SAUL LOEB, AGENCE FRANCE-PRESSE
Former US President Barack Obama
“If Joe Biden throws in the towel, it opens up new perspectives. At the moment, Donald Trump is considered the winner, but if Joe Biden were to be replaced by a younger candidate, it could change the outlook for a Trump victory,” continued the Spartan Capital analyst.
The portfolio rotation movement continued, with investors diversifying their investments after having mainly focused on technology.
Amazon fell 2.22%, semiconductors AMD lost 2.30%, Alphabet -1.86% and Apple -2.03%.
For Art Hogan of B. Riley Wealth Management, “the market is so overbought […] that it doesn’t take much for investors to take their profits after having such a great run.”
The Russell 2000 index, which includes small and mid-cap stocks and which benefited from the recent rotation, also fell 1.85%.
After the close, Netflix was down 1.56% in electronic trading after reporting better-than-expected results.
The streaming pioneer beat Wall Street expectations with $9.56 billion in revenue, including $2.15 billion in net profit.
Netflix gained more than eight million new subscribers in the second quarter, a much better result than the approximately five million expected by the market, after already two quarters of sustained growth.
In a completely different sector, Eli Lilly Laboratories, whose shares have soared 50% since the beginning of the year on its injection-based anti-obesity treatment, fell 6.25% to $848.90. The stock began to fall on Wednesday when its Swiss rival Roche announced a promising first trial of an oral pill against excess weight.
Bond rates remained in the green at 4.20% versus 4.15%.
TSX down
Losses in the base metals sector pushed Canada’s main stock index lower on Thursday.
The S&P/TSX composite index closed down 124.41 points at 22,726.76.
Investors are awaiting the Bank of Canada’s upcoming interest rate decision, which is expected to signal a second cut.
As the Bank of Canada makes further rate cuts, Petursson said he expects the central bank to shift its focus away from inflation and toward the broader economy, particularly unemployment.
“The risk would be greater if the Bank of Canada continued to focus on inflation and not unemployment, and then ignored the potential weakness that could create,” he said.
On the currency market, the Canadian dollar was trading at 73.01 US cents, compared to 73.07 US cents on Wednesday.