© Reuters S&P 500 Closes Lower as Cyclicals Stutter

By Yasin Ebrahim

Investing.com – The S&P 500 closed lower Wednesday, as cyclical sectors of the market slipped with financials and energy leading the broader market lower.

The S&P 500 fell 0.26%, the Dow Jones Industrial Average slipped 0.58%, or 160 points, the Nasdaq lost 0.33%, and the Russell 2000 was down 1%.

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Energy continued its sluggish start to the week, falling more than 1% as oil prices were pressured by data showing a draw of 3.2 million barrels last week from the U.S. Strategic Petroleum Reserve.

In a further hit to oil prices, the International Energy Agency warned of a “reprieve from the price rally […] due to rising oil supplies.”

Valero Energy (NYSE:VLO), APA (NASDAQ:APA), Phillips 66 (NYSE:PSX) led the energy sector lower.

Financials fell about 1% as banking stocks came under pressure amid easing Treasury yields as concerns grow about the impact fresh Covid-19 restrictions in Europe will have a global economic growth.

Goldman Sachs (NYSE:GS), State Street (NYSE:STT), Morgan Stanley (NYSE:MS), were among the biggest decliners, with the latter down more than 3%.

Financials and energy are the top performing sectors for the year, up about 34% and 45%, respectively.

In the midst of the pandemic gloom, there was positive news on Covid-19 treatments. Moderna (NASDAQ:MRNA) filed its application to the Food and Drug Administration to approve its vaccine booster doses for all people aged at least 18. Its shares ended the day up more than 4%.

Consumer discretionary, meanwhile, added to gains from a day earlier even as a slump in Target weighed on retailers.

Target (NYSE:TGT) fell more than 4% as better-than-expected quarterly results were offset by concerns of margins pressures ahead after chief executive Brian Cornell said the retailer was unlikely to pass rising costs onto consumers.

Lowe’s (NYSE:LOW) was marginally higher after raising its full-year guidance following quarterly results that beat on both the top and bottom lines.

TJX Inc (NYSE:TJX), meanwhile, delivered third-quarter results that topped Wall Street estimates as same-store sales climbed 14%, above expectations for a 3% rise. Its shares jumped 

Elsewhere, Visa (NYSE:V), a major Dow component, slumped nearly 5% after Amazon said it would stop accepting payments made with Visa credit cards in the UK.

Losses in the broader market were also kept in check by ongoing strength in big tech.

Meta, formerly Facebook (NASDAQ:FB) was lower, while Amazon (NASDAQ:AMZN),  Microsoft  (NASDAQ:MSFT), Google-parent Alphabet (NASDAQ:GOOGL) and Apple (NASDAQ:AAPL) were higher.

Apple was a standout performer closing up more than 2% as a reduction in lead times points to easing supply-chain issues for the tech giant. 

“What we do believe from the data is that Apple’s supply is gradually catching up to demand for both iPhone and Macs at this point in the cycle,” Goldman Sachs said in a note. 

On the economic front, October housing starts fell 0.7% month-over-month to a 1.52 million units, missing economists’ estimates got a rise to 1.58 million.

“We continue to blame the weakness on supply constraints,” Jefferies said in a note. “Demand for housing has improved in recent months corroborated most recently by yesterday’s home builder sentiment index which rose to its highest level since May.”

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