Yield Curve Inversion Signaling Downturn

Here is a daily recap of the S&P 500 broken down by sector followed by sector heat map as yield curve inversion signaling downturn. Stocks in heat map are based on the top 10 holdings of each sector ETF. Click on each picture to zoom in. Below is a summary of today’s action on Wall Street provided by CNBC:

US futures point to a slightly lower open

U.S. stock index futures traded slightly lower Tuesday morning as investors monitor developments in trade relations between Washington and Beijing. As of 2:26 a.m. ET, Dow futures were trading 80 points lower and pointed to an implied negative open of 24.83 points, while S&P 500 and Nasdaq futures both looked set to open marginally lower.

The S&P 500 (SPY) lost -0.32% today. Sector decliners led advancers 8 to 3 as shown below in the sector graph. Consumer discretionary (XLY), consumer staples (XLP), energy (XLE), financials (XLF), healthcare (XLV), industrials (XLI), real estate (XLRE) and technology (XLK) each had minor losses of less than 1%. Communication services (XLC), materials (XLB) and utilities (XLU) each had small gains of less than 1%.

The Dow Jones index gave back -120 points (-0.47%) to close at 25,777. The Nasdaq was in the red by -26 points (-0.34%) to settle at 7,826.

Yield Curve Inversion Signaling Downturn

Stocks dropped on Tuesday as a headline driven market fell on another yield curve inversion spooking investors.

The spread between the 10-year Treasury yield and the 2-year rate fell to negative 5 basis points, its lowest level since 2007. This is called a yield-curve inversion. Experts fear it because in the past it has preceded recessionary periods. The 3-month Treasury bill rate also traded higher than the 30-year bond yield.

“The primary thing is yields are going down and going down with some acceleration,” said Art Cashin, director of floor operations at UBS.

The major indexes rose after President Donald Trump said he expected the U.S. to strike a trade deal with China, citing economic pressure on Beijing. China also called for a resolution to the ongoing dispute.

Key Takeaways…

I took the following CNBC screenshots today regarding markets in August, 2019 earnings, S&P 500 vs. momentum, MTUM weightings, what kind of momentum and driving the action:

Notable S&P 500 Movers…

Below I’ve highlighted some notable S&P movers (both winners & losers).

Credit: Sector Graph provided by Sector SPDR app. Sector breakdown provided by Charles Schwab. Sector heat map provided by finviz. Information Credit: News Headlines and quotes were taken from CNBC in the writing of this post.

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8/27/19

S&P 500 Sector Graph

Yield Curve Inversion Signaling Downturn

S&P 500 (SPY)

Yield Curve Inversion Signaling Downturn

Communication Services (XLC)

Yield Curve Inversion Signaling Downturn

Consumer Discretionary (XLY)

Yield Curve Inversion Signaling Downturn

Consumer Staples (XLP)

Yield Curve Inversion Signaling Downturn

Energy (XLE)

Yield Curve Inversion Signaling Downturn

Financials (XLF)

Yield Curve Inversion Signaling Downturn

Real Estate (XLRE)

Yield Curve Inversion Signaling Downturn

Healthcare (XLV)

Industrials (XLI)

Yield Curve Inversion Signaling Downturn

Materials (XLB)

Technology (XLK)

Utilities (XLU)

S&P 500 Sector Heat Map

 

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