By Gorilla Trades. Originally published at ValueWalk.
Commenting on the impact of FinCEN leak on global banking stocks and today’s trading Gorilla Trades strategist Ken Berman said:
Q2 2020 hedge fund letters, conferences and more
The major indices are all trading considerably lower at midday following the most bearish overnight session since June. The S&P 500, the Nasdaq, and the Dow all hit new correction lows in early trading, but the tech benchmark has been slightly stronger than its peers. The troubling European COVID trends reignited the “lockdown trade” and put pressure on the most sensitive industries and cyclical issues, in general. The number of new cases continues to rise in several European countries and it seems very likely that further containment measures will be introduced in the U.K., France, and Spain, putting the global economic recovery in jeopardy.
FinCEN Leak Hits Global Banking Stocks
Global banking stocks were also hit hard due to a report uncovering a staggering $2 trillion in suspicious transactions over the course of two decades. JP Morgan (JPM, -4.2%), Goldman Sachs (GS, -3.0%), the British HSBC (HSBC, -6.3%), and German giant Deutsche Bank (DB, -8.3%) suffering the biggest losses and HSBC hit a new 25-year low. Oracle (ORCL,+2.4%) and has been contributing the most to the tech sector’s relative strength, with the company’s shares being propelled to a new all-time high by the approval of its deal with TikTok.
Market Wrap
Dow: 26,738, – 896 or 3.2%
S&P 500: 3,232 – 87 or 2.6%
Nasdaq: 10,585, – 208 or 1.9%
Russell 2000: 1,478, – 59 or 3.9%
Market breadth has been relatively weak this morning, as small-caps fell by the most since mid-June, with decliners outnumbering advancing issues by a more than 10-to-1 ratio on the NYSE at midday. 40 stocks hit new 52-week lows on the NYSE and the Nasdaq, while only 11 stocks hit new 52-week highs. The major indices have been trading below daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. Materials, energy-related issues, and industrials are more than 4% lower on average at midday, with financials only faring slightly better admit the rout, and besides tech stocks, only the defensive utilities and consumer staples have been showing notable relative strength this morning. Stay tuned!
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