There Is Something Weird About One of Tuesday’s Worst-Performing Stock Market Sectors - Barron's

Photograph by Drew Angerer/Getty Images

1:44 p.m. The Dow Jones Industrial Average is trying to limit its losses, but the same can’t be said of four sectors, which have dropped 0.8% or more. Three of them make perfect sense. One however, clearly does not.

With the Dow off 73.11 points, or 0.3%, to 26,062.68. and the S&P 500 down 0.4% to 2911.76, it is hard to get too excited by what’s happening in the market—or even identify what’s bothering the market. Perhaps it is falling Treasury yields—the U.S. 10-year yield has slipped 0.047 percentage point to 1.55%—which spooked markets so badly last week.

That makes sense for three of the four worst-performing sectors in the market today. The S&P 500 Materials Sector has dropped 1%, while the S&P 500 Financials Sector has fallen 0.1%, and the S&P 500 Energy Sector has declined 0.8%. Cyclical sectors all, they would be expected to drop if falling bond yields are a sign that investors are still worried about slowing economic growth.

The same isn’t true of the S&P 500 Consumer Staples Sector, which is usually considered a safe sector for its steady income streams and relatively sizable dividend yields. Staples, however, have dropped 0.9% on Tuesday.

Some of that is simply due to outside factors. McCormick (MKC) stock, for instance, has dropped 4.2% to $161.62 after JPMorgan cut it to Underweight from Neutral. Coty (COTY) has fallen 4.1% to $8.82 ahead of its earnings on Aug. 28. Conagra Brands (CAG), however, has dropped 4.2% to $28.79 despite the fact that there is absolutely no news on the company.

But there have also been concerns that “safe” consumer staples may no longer be safe thanks to a combination of larger debt loads, high valuations and changing consumer tastes.

Let’s just call it bad day for now.

Markets Now is a quick take on what’s happening with the Dow Jones Industrial Average and other major market indexes. Don’t forget to check out the rest of Barron’s markets coverage.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

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https://www.barrons.com/articles/there-is-something-weird-about-one-of-tuesdays-worst-performing-stock-market-sectors-51566324669

2019-08-20 18:11:00Z
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