US stocks ended at around their lowest levels of the session, as jitters ahead of a televised Presidential election debate took over from the gains in the oil sector.
The S&P 500 index ended down 0.9% at 2146 while the S&P Midcap 400 lost more, down 0.5% at 1542.
Financials led the decline on the S&P 500, falling 1.5 per cent, as investors soured on shares of lenders as global central banks continue to push accommodative monetary policy and keep interest rates low.
But it was rather aa series of isolated incident in the banking world that upset the sector. Specifically, Deutsche Bank’s (NYSE:DB) failure to win the support of Berlin in its fight with US regulators over a huge credit crunch-related penalty, as well as news that Goldman Sachs (NYSE:GS) will axe 25% of its staff in Asia.
But with a wide-ranging sell-off on Wall Street, it wasn’t just the banks feeling under the weather.
The risk-off trade came ahead of the first US presidential debate between Democratic candidate Hillary Clinton and Republican candidate Donald Trump in New York on Monday at 2100 local time. The high-stakes debate will centre on three broad topics namely: America’s direction, achieving prosperity and securing America and will therefore be of special interest to Wall Street. Read more.
But the biggest loser board of the day was small-caps. The S&P 600 shed 1.2% to 750, and was led by Universal Technical Institute Inc (NYSE:UTI), down 18.3% to $1.56. On Friday it was announced that AdvanSix Inc. (NYSE:ASIX) will replace Universal Technical Institute in the S&P SmallCap 600 after the close of trading on Monday, October 3.
There were gains among oil stocks, after the West Texas Intermediate advanced by 2.6% to $45.65 but it was not enough to dominate volumes.
Midsession
US markets extended losses at midsession on Monday as jitters overcame investors ahead of a major televised debate between the Presidential hopefuls while the oil sector burst into upside.
At 2100 EDT (0100 GMT) Republican Donald Trump will be pitched against Democrat Hillary Clinton for a highly-anticipated debate.
US markets already started the week lower thanks to weaker European bourses as well as disappointing US new home sales, albeit a smaller decline than forecast.
The S&P 500 market bellwether was down 0.8% at 2147 and led by Endo International (NASDAQ:ENDP) down 6.4% at $21.90. The session had begun well for the Ireland-domiciled specialty pharmaceutical company whose shares soared 15.5% on Friday after the company announced that its board of directors has appointed Paul V. Campanelli as the new President and Chief Executive Officer (CEO).
But profit-taking, which also hit other Friday risers ahead of the Trump-Clinton stand-off sent the stock sharply lower.
But the losses on the S&P 500 disguised the gains of oil stocks, which dominated the risers board. Transocean (NYSE:RIG) gained 5.1% to $9.56 and Murphy Oil (NYSE:MUR) up 3.8% to $27.08. The West Texas Intermediate was up 3.6% to $46.10.
The S&P Midcap 400 was down 0.3% to 1545 and led by Federated Investors (NYSE:FII) down 6.3% to $29.42. Again this disguised the better fortunes of the oil sector. Top risers included Consol Energy (NYSE:CNX) up 5.1% to $18.29 and Denbury Resources (NYSE:DNR) up 2.9% to $2.85.
The S&P Smallcap 600 was down 0.8% to 753 and led by Universal Technical Institute Inc (NYSE:UTI) down 17.8% to $1.57. On Friday it was announced that AdvanSix Inc. (NYSE:ASIX) will replace Universal Technical Institute in the S&P SmallCap 600 after the close of trading on Monday, October 3.
Open
US stocks opened lower with overnight global markets on Monday and as US housing data disappointed.
The market bellwether S&P 500 index was down 0.7% at 2,150, having opened at 2,158.
The biggest early decliner was pharma stock Mylan (NASDAQ:MYL) down 1.3% at $41.51 after analysts at Argus gave a lower stock price target than other recent brokers.
Argus assigned a $55.00 target price together with a “buy” recommendation. Last month, Mylan rattled Congress over allegations of marking up the price of its EpiPen product.
The S&P Midcap 400 index was down 0.2% at 1548 and led by CBOE Holdings (NASDAQ:CBOE) down 3.77% at $67.65. The securities exchange operator was lower after announcing it is buying Bats Global Markets, Inc. (BATS:BATS), itself down 3.2% at $30.80.
The companies said on Monday they had entered into a definitive agreement under which CBOE Holdings acquires Bats in a cash and stock transaction valued at approximately $32.50 per Bats share, or a total of approximately $3.2bn, consisting of 31% cash and 69% CBOE Holdings stock, based on CBOE Holdings' closing stock price of $70.30 per share on Friday.
Meanwhile, the S&P Smallcap 600 was down 0.5% at 755.
Deutsche Bank (NYSE:DB) shares were down 6.2% at $11.96 after a German magazine reported over the weekend that the German government won't get involved in a dispute between the bank and the U.S. Justice Department, which is demanding $14bn over allegations Deutsche packaged up toxic mortgages between 2005 and 2007.
The same report claimed the German government would not bail out Deutsche Bank if necessary.
Adding to the downbeat mood of the market, US new home sales slid in August, but by less than Wall Street economists expected, as the market for new home construction cooled following a sharp rise in July. New home sales dropped by 7.6% on a month-on-month basis to an annualised rate of 609,000 units, the Commerce Department said. Forecasts expected up to an 8.8% decline.
Pre-open
Wall Street shares are seen opening around 0.5% lower on Monday with banks dragging the bourse lower but with declines buttressed by higher oil prices.
The market bellwether S&P 500 index future was indicating down 0.43% at 2154.
The general mood of the market was a negative start to the week, with banking stocks expected tp be among the main losers. Germany's Deutsche Bank (NYSE:DB) is falling by 6% to $11.99 pre-market to its lowest level in at least 16 years.
A German magazine reported over the weekend that the German government won't get involved in a dispute between the bank and the U.S. Justice Department, which is demanding $14bn over allegations Deutsche packaged up toxic mortgages between 2005 and 2007.
The same report claimed the German government would not bail out Deutsche Bank if necessary.
Banks are having a rough ride in one of their comfort zones too – Asia. Bloomberg reported at the weekend that Goldman Sachs (NYSE:GS) plans to cut about a quarter of its investment-banking jobs in Asia, excluding Japan, because of a slump in deal-making in the region. Pre-market the shares took it on the chin, down 0.7% at $164.
But gainers included oil firms Noble Energy Inc (NYSE:NBL) indicated up 4.2% at $34.42 and Anadarko Petroleum (NYSE:APC) up 3.4% at $61.50.
The US oil benchmark West Texas Intermediate was up 1.4% at $45.10.
Broker Oppenheimer downgraded Twitter (NYSE:TWTR) to "underperform" from "perform” after media reports that Twitter was nearing a sale of the micro-blogger. Oppenheimer said a likely buyer would not pay much above its $17 price target – suggesting a large downscaling of value from Friday’s closing level of $22.64.
Twitter shares were down 4.5% at $21.60 pre-market.
In data, August new home sales are due on Monday and forecast to decline by 8.8% versus a 12.4% rise last month.