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Market Recap: Friday, September 18

The markets closed in the red with the S&P 500 seeing its longest losing streak since October and the NASDAQ seeing it longest losing streak since August 2019, as the big tech stocks extended a weeklong sell-off. The Final Round panel discusses the latest.

Video Transcript

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SEANA SMITH: Welcome back to The Final Round. on Yahoo Finance. I'm Seana Smith and taking a look at how stocks closed out the week. All three of the major averages are in the red for today with the Dow off just about 8/10 of a percent off over 200 points of some selling there into the close. The S&P off just over 1% as well as the NASDAQ.

In terms of what we saw for the week, we both have the S&P and the NASDAQ down three weeks in a row. So just to put this in perspective for everyone, it's the longest losing streak for the S&P since October of 2019. It's a longest losing streak for the NASDAQ since August of last year.

So taking a look at some of the sector action today, we saw selling across the board. Technology was the worst performer. And we saw that reflected in a lot of the big tech stocks today. Apple off over 2%. Microsoft off over 1% as well as Netflix.

Taking a look at Apple, though, that has been a huge decliner over the last couple of weeks. It's down for three weeks in a row. And, of course, this is the first time that this has happened for Apple since May of last year. A couple of the other underperformers sector-wise in the market today of utilities, real estate, and energy.

But a couple of names, though, did buck this downward trend. Two big IPOs. Unity Software. We just talked to the CEO last hour. That stock soaring in its public debut. And then, of course, Snowflake. It went public earlier this week. It also jumped in its public debut. It sold off a little bit yesterday but rebounding just a bit today closing up nearly 6%.

And then, of course, we had the work-from-home play, the pandemic winner Zoom, having its best week in four weeks. But I want to bring in my co-host for the next 60 minutes, Myles Udland. We're also joined by Yahoo Finance Jared Blikre, as well as Ines Ferré.

Myles, just first you in terms of wrapping up the week. The third week in a row that we're seeing losses for the S&P and the NASDAQ. A lot of that pressure coming from those big tech names. But what stands out to you in today's action?

MYLES UDLAND: Well, I think what stands out is that after, you know, kind of Tuesday, Wednesday, there being a suggestion, perhaps, given the way the market behaved that that correction that kind of took hold very end of August, early September-- I remember last week, we're like, oh, you know, that was probably it, write off 7%. And a couple of trading sessions, we'll probably move on.

I think we now should at least consider the possibility a change in character for the market. And maybe it is just the end of the third quarter, the end of this month. You know, people kind of working out, kind of where they want to be positioned as we get our-- towards the fourth quarter and towards the election and all that.

We have a very important earnings season coming up, really just in about three weeks from now. So it will be very interesting to see how much the market reacts or doesn't to those results as they roll in. But at a time when news on the virus is getting incrementally more positive, when the economy appears to be holding in better than expected, given the lack of additional stimulus, the Fed notably upgrading their GDP forecasts this week, GDP tracker is suggesting a very strong third quarter.

I think it is-- it's curious to see the market take that backdrop as a time, perhaps, to take a step back. And I think if nothing else is a reminder of how all of what you would assume would make sense, right? Economy is in the tank. Stocks would follow.

Well, as the economy tanked in the spring, stocks started ripping higher. Maybe now, as the economy surprisingly repairs itself, we see the markets take a step back. Three weeks isn't a definitive statement of kind of any new regime or anything like that. But it is certainly something that at least at this point, it would be worth keeping an open mind about.

SEANA SMITH: Hey, Myles, it's certainly interesting. And of, course, I will come into focus as we just look at the rest of not only this quarter, but then, of course, into the fourth quarter as well.

Jared, I want to first go to you just in terms of what we saw today because we got quadruple witching. And it's interesting. You know that this happens just the first day on the third Friday of the month for every quarter. So what happened today, it usually means higher than average trading volumes and also volatility. But what did you see in terms of today's action leading into the close?

JARED BLIKRE: Yeah, well, there are two different parts to this. Options expiration-- those options on the indices, like the S&P 500-- those expired on the open. And we saw a big volume surge. And then the options on individual names, like Apple and Tesla-- those are expiring now. A lot of those are going to be determined by the new post-market prices.

But, you know, it's pretty interesting. In a week where all the three majors were down, we're looking at a VIX that was also down. And we've noted these kind of disparities with the VIX. I think the opposite situation was in play last week. But looking at a three-month chart of the VIX and putting the 50-day moving average, which we've been tracking on the indices, the indices are largely below it.

The VIX is holding above it. So want to keep that in mind going forward. 10-year T note yield had a pretty quiet week, although we did end up up a little bit. And I just want to go back to Wednesday's Federal Reserve statement and presser by Jerome Powell. We'll go back to a five-day chart. This really started the slide that we're seeing here.

And his comments-- he really went-- he wasn't too positive on the economy, number one. And also, we didn't get any language in the FOMC statement or in his testimony that indicated that there would be any kind of yield curve control. There wasn't the extra forward guidance that a lot of people thought might get put in that statement. And so it's not surprising that we saw a sell off from there.

But, as I noted before just before we got the closing bell here, we are seeing a number of sectors that have been in the green this week. So let's take a look at the sector action over the last five days. And we can see-- let's see here. There we go.

Energy up 3%. Industrials up 1 and 1/2%. Also seeing materials, health care, and real estate in the green. And then to the downside is where we see the cluster of those Fang sectors, like communication services, discretionary, tech. Also noteworthy that staples were down.

But the market is behaving as though the yield curve is expanding, which it did a little bit since Wednesday. And maybe we're in for that great rotation from momentum and growth into value and cyclicals. A lot of people have been looking for that rotation for a long period of time. But I don't want to jump the gun and say we're there. But we have the pieces in place there.

Now, what's going to happen to the overall indices? As long as we keep getting this weakness in the tech stocks, especially the big mega cap names, probably going to not make too many advancements. And the indices could trade down. But I find it somewhat healthy that we are seeing bids in all these other sectors, like materials and industrials.

If we look at the NASDAQ 100 sorted by performance for the week, we can see Tesla and Zoom up nicely. That would be Tesla up 18%. Zoom up over 14%. And they've kind of decoupled from those big Fang names. And so I think even Mercado Libre was up for the week decently.

So, really, we're just dealing with that concentration issue where we have so much market cap tied up in a few names-- five or 10 names-- lots to talk about that. Maybe they're getting reset here and such that when the market does-- is ready to go up with the tech stocks, if they can regain some momentum, not necessarily be leaders, but go up with the value and cyclical names, then that's when we would see that advance. Only question is, when does that actually happen?