The S&P 500 index (SNPINDEX:^GSPC) fell a sharp 3.5% on Oct. 28, one of the worst days in months in a week that's seen stocks close lower every day. So far this week, the index of over 500 stocks that represent some 80% of U.S. stock market value is down more than 5.6%.
Today's sell-off is the product of the same thing that's had investors on edge for the past several days: a resurgent coronavirus pandemic. More than 72,000 new COVID-19 cases were reported in the U.S. over the past 24 hours, marking the continued trend higher over the past couple of weeks, with the 7-day moving average in the U.S. now at the highest levels since the virus began spreading in the country. Overseas, Germany and France are taking steps to reduce the spread of the disease, and investors expect that some U.S. states could take similar actions.
Today's brutal sell-off was particularly notable at the top of the index. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL)(NASDAQ:GOOG), and Facebook (NASDAQ:FB) shares all fell 5% or more. The Technology Select Sector SPDR ETF (NYSEMKT:XLK) fell 4%, and is down 12% since the September peak, back into correction territory.
But before you think today's decline was just the big names at the top of the index, think again: 491 of the 503 stocks in the index fell today.
Automatic Data Processing (NASDAQ:ADP) and General Electric (NYSE:GE) were the only two that gained more than 4% today, following earnings reports that were good enough to convince investors to bid up their shares on a very bearish day.
Coronavirus worries, economic and political uncertainty have investors fearful
Today's stock sell-off was largely a product of investors worried about the implications of another coronavirus wave, particularly the potential economic implications of a return to the stay-at-home orders that cratered the global economy in March and April.
Crude oil prices fell more than 5% today, putting both West Texas Intermediate and Brent crude futures below $40 per barrel, erasing all of the -- modest -- gains during the summer peak demand season. Crude oil inventories are on the rise, and global oil giants are adding more oil to the market, sending oil stocks even further down as uncertainty and risk in the oil patch ratchets higher.
And with a major U.S. election coming next week -- and Congress in recess, meaning no government stimulus in the works anytime soon -- there's a tremendous amount of bearish uncertainty that's dominating the narrative.
Tech stocks back in correction
With a 4% decline today, tech stocks have now given back 10% of their gains from the peak in early September. The S&P 500 as a whole isn't far behind, down 8.7% from the all-time high. The biggest of the mega-cap stocks at the top of the index have all fallen more than the S&P as a whole, while Apple and Microsoft have both fallen the most:
Even strong earnings from Microsoft weren't enough to assuage investors. The company reported $37 billion in revenue, up 12%, and a 32% uptick in earnings per share, to $1.82. The next couple of days will be interesting, as the rest of the mega-tech cohort report their latest quarterly results.
ADP & GE among the few bright spots
GE reported earnings before trading open today, beating expectations with $19.4 billion in revenue, and surprising investors who were expecting a loss, with a $0.06 per share profit, adjusting for some non-cash expenses related to ongoing restructuring. According to management, GE is well on its way to the cost-cutting part of its restructuring, having already reached about $1.5 billion of the $2 billion in planned cost reductions. Put it together, and GE has transitioned from troubled to "getting better" but still has a long way to go before you can call it recovered. Between ongoing challenges in end-markets -- try selling jet engines right now -- and a balance sheet that still needs work, CEO Larry Culp still has work to do.
ADP announced a small 1% decrease in revenue, with a 3% increase in earnings, both relatively in line with expectations. Where ADP made investors happiest was its outlook, which now expects revenues to hold relatively steady -- a real concern for a payroll and HR services company in the midst of the worst employment crisis in a decade -- and for earnings to do the same thing.