Stock Market Update

[BRIEFING.COM] The global sell-off that began late last week on fears about US economic growth continued to start the new week. Japan's Nikkei slumped 12% overnight, contributing to a cautious feeling in the US market today. The price action in Japanese stocks was related to an unwinding of the yen carry trade following a rapid strengthening in the yen against the dollar. 

The Dow Jones Industrial Average settled 2.6% lower, the S&P 500 sank 3.0%, and the Nasdaq Composite registered a 3.4% loss. Today's retreat had the S&P 500 flirting with correction territory and the index ultimately settled 9.3% below its high close on July 16.

Just about everything came along for the downside moves. Only 22 of the S&P 500 components closed higher than Friday and all 30 Dow components logged a decline. The 11 S&P 500 sectors closed with losses ranging from 1.7% (industrials) to 3.8% (information technology).

Losses in the mega cap and chipmaker spaces had an outsized impact on index performance. NVIDIA (NVDA 100.45, -6.82, -6.4%) was a standout from both spaces, registering a sizable loss due in part to news that a chip has been delayed, which might impact other big tech names, according to The Information.

The price action in Treasuries had the 2-yr yield briefly move below the 10-yr note yield for the first time in about 2 years. Buying dissipated, though, in response to a better-than-expected ISM Non-Manufacturing Index for July. The bond market settled little changed from Friday. The 10-yr note yield settled one basis point lower at 3.79% and the 2-yr note yield settled one basis point higher at 3.88%.

• S&P 500: +8.7% YTD
• Nasdaq Composite:+7.9% YTD
• S&P Midcap 400: +3.1% YTD
• Dow Jones Industrial Average: +2.7% YTD
• Russell 2000: +0.6% YTD

Reviewing today's economic data:

• July S&P Global US Services PMI - Final 55.0; Prior 56.0
• July ISM Non-Manufacturing Index 51.4% (Briefing.com consensus 51.3%); Prior 48.8%
  • The key takeaway from the report is that overall activity in the largest sector of the U.S. economy rebounded strongly with Indices for Business Activity and Employment jumping back into expansionary territory after contracting in June.

Tuesday's economic data is limited to the June Trade Balance at 8:30 ET.