Stocks tumbled again today as the market’s bad week got even worse. The Dow, S&P, and Nasdaq Composite all fell, dragging equities beneath their summer lows.
Analysts on Wall Street fear that additional losses are on their way in October despite the fact that it’s been a historically strong month for bulls.
“It’s been a tough, tough environment for equities and fixed income both, something that we had expected given our views around the Fed keeping interest rates higher for longer and markets are starting to come around to that view,” said Horizon Investments’ Zachary Hill.
“In the near term, we are likely to have continued market volatility with a downward bias as we head into earnings season.”
Shockingly bad earnings guidance from Nike (NYSE: NKE) limited stocks this morning while the personal consumption expenditures (PCE) deflator showed hotter than expected core inflation in August (+4.9% year-over-year vs. +4.7% expected). This unsurprisingly upset investors who were hoping for a cooler print that would slow down the Fed’s tightening campaign.
“The market stinks,” said Harris Financial Group managing partner Jamie Cox.
“But that’s basically what the Fed wants: tighten financial conditions, and they believe that that will help bring down inflation to the levels that they find acceptable. And they’re using the transmission mechanism of the market to make that happen.”
Over 53 stocks in the S&P 500 touched fresh 52-week lows this afternoon. Carnival (NYSE: CCL) and AT&T (NYSE: T) hit new 30 and 19-year lows, respectively.
Lowe’s Companies (NYSE: LOW) did not, on the other hand, fall nearly that much just yet. But that might mean the stock has further to tumble in the coming weeks.
LOW touched support (yellow line) today after setting yet another lower high. The stochastic indicator also suggests the stock has plenty of room to fall. LOW is trading beneath the 10, 20, and 50-day moving averages, too, suggesting that a breakthrough past support could result in a major bearish continuation.
For those reasons, it might make sense to take LOW short with a trade trigger of $184.01, below support, as the general market attempts to slow its descent in October.