UPDATE: 2pm Strikes… And stocks go lower just before I hit send on the View (procrastination pays off?). Anyway, stocks have dropped fairly sharply over the last few minutes as word broke the House will go forward with a vote on the Democrats’ proposed stimulus bill even without gaining Republicans’ support (thus it won’t pass the Senate). The S&P is now hovering barely in the red while the Nasdaq has held onto gains relatively well. The sector outperformers/underperformers described below still hold true relatively speaking, just on a lower absolute level (sadly the Green Day pun does not…)

Windows Never Fully Dressed. Following yesterday’s lack of stimulus headlines, which put a negative spin on the day/quarter end, markets came back roaring today, thanks to an update in that regard. Markets are on track for the second consecutive quarter of dramatic gains, continuing an historic recovery that few predicted in the depths of March. The move aggressively higher is a tad surprising, given the depression cloud settling over America after last night’s repugnant clown show / debate. Apparently though, “the debate changed nothing, except to diminish the country’s dignity a little bit more (Ramesh Ponnuru).” Thus, investors have chosen to ignore the dull political hangover drumming on their brains and instead focus on the fact that Treas. Sec. Mnuchin suggested he’ll offer Dems a $1.5trillion proposal in aid. Further, economic data showed US companies added more jobs than expected in September. Still, the S&P is being led by Healthcare, as vaccine developers rally thanks to promising signals from Regeneron (though the stock has fallen today as Wall Street criticizes the results). Moderna was up almost 7% yesterday and Pfizer (+2%) and BioNTech (+3.1%) are following suit today after revealing more detailed early vaccine data. Natch, tech is not far behind. Nvidia (+2.5%), Amazon (+1.5%) and Apple(+2.2%) are performing with their usual charm, despite a disappointing show from Micron overnight (MU -6%) after halting shipments to Huawei. The whipsaw nature of the past 2 weeks has left investors heads spinning. Unfortunately, we still have August Personal Spending/Income, September ISM figures, and the NFP report still this week. Dumpster. Fire.

September’s Not Over Yet… Yesterday’s “buy everything” session sparked hope for a more positive conclusion to what’s been a month to forget, but US stocks are once again finding themselves on the receiving end of an uncomfortable reality check. It seems any month-end/quarter-end boost has quickly evaporated, and a combination of alarming series of Covid headlines and an alarming lack of stimulus headlines have put a negative spin on what was at first looking to be a fairly flat day ahead of the first Presidential debate tonight. Still the S&P has mostly held yesterday’s low (3333) and is now attempting to reclaim some losses as 2pm nears. Defensive sectors like Food Retail, Utilities, and Healthcare have fared relatively well, but have been surpassed by Semis which are now leading the Nasdaq back into positive territory as they manage to stay hot with Micron (MU +2.5%) earnings coming after the bell. The risk-off tone has the losers losing once again, with Banks giving back a chunk of yesterday’s gains and Energy the biggest laggard as crude plunges through its 100d moving average

“Run away, Run away” – Well, not today.  The S&P 500 continues to hold the June high (3233) support and investors are using the opportunity today to buy some of the names that have been working this year (decade).  Tech once again is leading with help from Apple (+2.4%) and Microsoft (+1.8%), and FANG is up 1%.  Overall breadth in the SPX is positive, with 400 names trading higher.  The sector lagging?  Energy (XOP -1.2%).  Even though participants are adding to their favorite stocks, US Treasuries are still in the green (10-yr yield 0.656%) as well as the Dollar (DXY +34bps), so it’s tough to say today is a risk on day.

Fasten Your Seatbelt.… From here on out (“on out” = the rest of 2020 at least) we are in for a bumpy ride — ok, maybe the roller coaster started some time ago. Either way, today has been further proof that this year will go down swinging. Nothing we didn’t already know was revealed – more of the same pandemic and president-related concerns—yet, markets bobbed up and down over the course of the morning then ramped back up to break +1%. That said, this month has pulled the S&P down more than 9% and though markets are well into the green now, it doesn’t feel very sturdy. In fact, the S&P entered correction territory early this morning, following jobless claims that did little to instill confidence in the economic recovery. The weak report underlined Fed Powell’s words yesterday that more needs to be done fiscally. Stocks were able to reverse course initially thanks to a record number of home purchases that proved just how much life has changed since the pandemic and then were fueled higher again by speculation surrounding the potential for stimulus talks to resume by Ms. Pelosi and Mr. Mnuchin. Tech stocks are outperforming the charge as per the usual, in conjunction with..oh hello banks (Jeffries had a record quarter and a broker recommended buying Goldman amid volatility this am). Only healthcare is on the opposite end, but doing little to cap any potential gains. One warning. According to strategists, it would be wise to keep an eye on QQQ’s into next week. If selling perks up again and the $270 level is taken out, the downside risk could be immense. It’s a very long way down.

I Heard You the 10th Time… It seems Turnaround Tuesday wasn’t packing much staying power, as stocks are continuing to slide into the afternoon as Monday’s nervousness is rearing its ugly head again. Commentary from Fed-heads is adding to the unease today. The message is same thing as it’s been the past few months: further stimulus is needed to complete the recovery, but that it’s on the government to step up this time (in Powell’s words, the Fed has “done basically all of the things that we can think of”).

Still not sold – The familiar theme of a tech led rebound has been the narrative today.  While the FANG is seeing a nice bounce (+1.8%), Media is getting more attention after Trian announced a stake in Comcast (+3.3%) yesterday.  Retailers are also enjoying the green, but today its Carvana (+23%) positive guidance rather than the Covid winners leading.  Banks unfortunately are still lagging, with the BKX (-2.3%) remaining below all of its main technical moving averages.  All major equity indexes remain under their short-term 50 day ma’s (SPX 3347, CCMP 11,009, RTY 1529), and until they reclaim those level, downside to their 100’s remain a possibility. 

A September to Not Remember… It’s a Bloody Monday to start the week, with the market suddenly viewing a slew of “old” risks (the upcoming election, US-China tension, eco-data slowing) in a much more concerning light, but the primary driver of today’s dour mood is the threat of renewed lockdowns in the UK as the virus reemerges (just look at ZM +5%, GRUB +1%, PTON +5%). Tech/Semis are holding up relatively well amid the uneasiness as investors look to the old lockdown favorite for shelter (more below), and defensives Utilities and Food Retail are faring better. On the flipside, more Cyclical sectors Autos, Cap Goods, and Materials are handing back some of their rotationary gains. Energy is also lower as DXY strength and Libya resuming some oil exports delivered a blow to crude. And then there’s Banks… the perennial punching back is being bruised again on back of the ICIJ suspicious transactions report involving several global players.

Tick Tock, Tick Tock… The clock is slooowly counting down to the weekend, which can’t come soon enough for US stocks as Tech keeps tick-ticking lower and tick-taking everything else with it. Early on it looked like the sector might use the quad-witching Friday as a chance to bounce out of a busy Fed week, but instead it has steadily slid as the session’s gone on. News that Tik-Tok’s own clock is ticking isn’t helping: the Commerce Dept announced it will block US downloads of the China-founded app starting Sunday, stirring doubt over Oracle’s (ORCL – 0.9%) deal with parent ByteDance will be approved. Second wave virus concerns are also weighing, with data from Europe showing the largest jump in daily cases in months from countries like France and Germany spilling cold water on Travel/Leisure and Airline names (CCL -4.5%, MGM -2.6%, UAL -3.8%). Still signs of rotation are around, with Autos clinging to green and Banks/Financials and non-airline Transports outperforming as well. US indices have attempted to put in a bottom over the last 30 mins (S&P went through 3300) but  it could be a bumpy ride into expiry at the close…     

A cautious Fed means Red – Chairman Powell yesterday moved out his low rate scenario to the end of 2023 when they expect inflation to finally hit 2%.  But in the new let it run hot inflation targeting, does that mean rates could be lower for even longer than 2023?  Powell has always been the pragmatist in regards to Covid, listening to doctors, and acknowledging the economic impacts, but that does not mean the markets want to hear it.  Stocks, and bonds, are both under pressure again today in a broader risk off mood.  FANG is down 2.4% and this is keeping Nasdaq below its 50 day moving average (10982).  Value (-0.37%) is outperforming Growth (-1.4%), as well is the Russell (RTY -0.62%).  Tomorrow is quad witching expiration, and this will start to drive index/ single stock action into the weekend.