Since the S&P 500 and Nasdaq peaked on September 2nd, we’ve seen rotation out of the post-COVID winners and rotation into laggards in the value space.  Below we take a look at the best and worst performing stocks in the Russell 1,000 since the 9/2 high for the S&P.  For each stock, we also include its YTD total return and its percentage change from the 3/23 COVID Crash low through 9/2.

Capri Holdings (CPRI) is up more than any other stock in the Russell 1,000 since 9/2 with a gain of 17.43%.  Even after the recent gains, however, Capri — the holding company for brands like Michael Kors, Jimmy Choo, and Versace — is still down 52.9% year-to-date.

Only four other stocks are up more than 10% since 9/2 — Beyond Meat (BYND), PVH, Virtu Financial (VIRT), and Reinsurance Group (RGA).  Interestingly, BYND and VIRT are also up big (~80%) year-to-date, while PVH and RGA are both down more than 35% year-to-date.

What stands out the most about the list of winners is that only one Technology stock made the cut — Sabre (SABR).  Most names come from the two consumer sectors including cruise-liners like Carnival (CCL), Royal Caribbean (RCL) and Norwegian Cruise (NCLH), Kohl’s (KSS), Williams-Sonoma (WSM), Six Flags (SIX), Foot Locker (FL), and Ralph Lauren (RL).  Both UBER and LYFT also made the cut with gains of 6% since 9/2.  The 30 biggest winners since 9/2 are still down an average of 20% year-to-date, while the rest of the stocks in the Russell 1,000 are up an average of 1.46% YTD.

While only one Technology stock made the list of biggest winners since 9/2, the sector accounts for two-thirds of the 30 biggest losers over the same time frame.  As shown below, since 9/2, the six worst performing stocks in the Russell 1,000 and ten of the worst twelve all come from Tech.  Notably, though, these 30 stocks that have all fallen more than 12% since 9/2 are still up an average of 5.6% YTD.  Were it not for the horrid YTD performance of the Energy stocks that made the list, the average YTD gain would be even higher.  Receive Bespoke’s most actionable research and access our Trend Analyzer and Chart Scanner tools with a two-week free trial to Bespoke Premium.

Things were actually pretty calm this week for jobless claims.  For the first time since August of last year, initial jobless claims were unchanged this week relative to last week’s 3K upwardly revised number of 884K. That was above forecasts of a reading 34K lower at 850K.  With the caveat that comparisons of the past two weeks to prior readings are not exactly like for like on account of a change to the seasonal adjustment methodology (which we discussed in greater detail last week), that 884K reading is still a very high level of claims relative to history but is at the low end of readings since the pandemic began.

Non-seasonally adjusted claims were higher this week by 20.1K coming in at 857.1K.  That is the second consecutive week with higher claims by this measure and which leaves claims at their highest level since August 20th.  Granted, that is still at the low end of the range since the pandemic began.

Continuing claims (seasonally adjusted) saw similar results with a slightly higher reading of 13.385 million compared to 13.292 million last week.  As with seasonally adjusted initial claims, the caveat with comparisons of pre-September readings still applies, but this was the first time seasonally adjusted continuing claims rose in five weeks.

Taking into account Pandemic Unemployment Assistance (PUA), total initial claims have continued to worsen with the total count now at 1.7 million; up from 1.58 million last week and the highest since July 24th.  The bulk of that increase comes from PUA claims which were up to 0.84 million from 0.75 million last week.  This week marked a fourth consecutive week that both PUA claims and the total (PUA plus regular) claims have risen week over week.  Continuing PUA claims for the week of August 21st which are lagged an additional week to regular continuing claims also rose with the most recent reading of 14.6 million marking a pandemic high. Even though regular claims are off their peak and have been trending lower, that leaves total continuing claims at the highest level since mid-July.

One interesting point of this data is that this weakness comes at a time of year in which claims have tended to turn around and head higher.  As shown below, on a non-seasonally adjusted basis, this time of year on average has marked the annual bottom for NSA claims with the bottom for continuing claims typically coming a bit later before both rise into the end of the year. In other words, it is hard to say to what degree it is the case, but the recent uptick in both initial and continuing claims (especially taking into account PUA claims) could at least partially be a result of seasonality.  Click here to view Bespoke’s premium membership options for our best research available.

With the Nasdaq entering a correction in under a week and the S&P 500 dropping just over 7% from last Wednesday’s closing high to Tuesday’s low, investor sentiment has understandably taken a hit.  After a four-week stint in which the percentage of investors reporting as bullish in the American Association of Individual Investors (AAII) survey stayed above 30%, this week less than a quarter of respondents are bullish.  At 23.71%, bullish sentiment is at its weakest level since the first week of August when it was 23.29%. Additionally, the 7.09 percentage point decline was the largest one week drop in bullish sentiment since mid-June when it fell 9.91 percentage points.

The decline in optimism was obviously met with a similar-sized increase in pessimism.  The percentage of investors reporting as bearish rose 6.68 percentage points this week to 48.45%.  That is the highest reading since the last week of July when bearish sentiment stood slightly higher at 48.47%. It was also the largest one week gain to bearish sentiment since June 18th. As shown in the chart below, that is at the high end of the past few months’ range but is still off the highest readings of the pandemic when more than half of respondents reported as bearish.

With the big moves in bullish and bearish sentiment, the bull-bear spread moved deeper into negative territory (which it has been in for a record 29 weeks now) falling from -10.97 to -24.74 this week. That brings the spread back to similar levels to the end of July. Since the pandemic began, there have only been five other weeks that the spread has been lower: the last week of July, June 25th, May 7th and 14th, and April 23rd. In other words, bearish sentiment continues to dominate.

Meanwhile, over a quarter of respondents are neutral on the market. 27.84% of respondents to the AAII survey reported as expecting no change in the S&P 500 over the next six months which was little changed from 27.43% last week and is basically right in line with the average of 25.77% since the bear market low in March.  Click here to view Bespoke’s premium membership options for our best research available.

Today’s Job Openings and Labor Turnover Survey (JOLTS) report from the Bureau of Labor Statistics (BLS) on the flows in and out of jobs as well as the number of job openings was pretty encouraging. As shown in the first pair of charts below, the number of open jobs as a percentage of the labor force has surged back to pre-pandemic levels and is close to the very strong levels seen at the prior peak. This is a good sign that labor demand is holding up pretty well in aggregate.

Also encouraging is that while not at extreme lows, layoff and discharge rates are back to the levels they sat at in 2019. Instead of settling at a new higher level, the 1.4% private sector layoff and discharge rate is at the same level it was at numerous times during 2019 and the first two months of 2020. Hiring, which crashed and then surged as businesses started to reopen, was 4.1% the labor force in July. That was a stronger pace than any month in the history of the last expansion.

Finally, we think quit rates are about the best indicator of labor bargaining power available. As shown, they are bouncing and bouncing hard. They have not fully recovered from COVID’s hit, but the size and speed of the bounce is consistent with a very strong trajectory for labor markets relative to what other indicators (for instance, permanent job losses in the Employment Situation Report, or the level of unemployment claims) are saying. We will have more granular analysis of the JOLTS report tonight in The Closer.  Click here to start a free trial and receive The Closer tonight with more analysis on the JOLTS report for July.

Through yesterday’s close, the S&P 500 has fallen just under 7% from its high on September 2nd. Compared to other major global stock markets that we track in our Global Macro Dashboard, only China has also fallen over 5% in the past week. The average global stock market of these 23 markets is down 1.8% since 9/2. Only three—South Korea, Sweden, and the UK—have risen in the past week.  In other words, stocks have dropped around the globe but the US and China’s declines have far outpaced the rest of the world.

One interesting point of the past week is these declines have only brought US stocks off of their 52-week highs.  As of last Wednesday, whereas US equities were at a record high, the average global stock market was over 10% below its 52-week high. As shown below, other than the US, the only other country that was within 1% of a 52 week high last week was China; the second-largest decliner in the past week. After those large declines in the past week, the US and China stand out far less than they did last week in terms of distance from 52 week highs.

That dynamic of the US outpacing its global peers is nothing new though.  As shown in the chart from our Global Macro Dashboard below, the US has consistently outperformed the rest of the world over the past ten years (a rising line indicates outperformance and vice versa). While its relative strength has been more mixed over the past ten years, China has similarly seen its equities outperforming recently. Click here to view Bespoke’s premium membership options for our best research available.

This morning, the Mortgage Bankers Association (MBA) released this week’s reading on mortgage applications. Seasonally adjusted purchases were up 2.6% from last week, rising to the highest level since the first week of July. In the past few months as housing activity has surged, other than that July reading, there was only one other time that purchases were stronger, and that was in the second week of June.  In other words, purchase activity is once again on the rise after taking a bit of a breather in the summer months and is currently back to some of its strongest levels since early 2009. With rates staying low, refi activity similarly remains around some of its stronger levels of the past decade gaining nearly 3% this week. Granted, that is still in the range that the index for refinances has been in since the spring.

As shown in the charts below, on a non-seasonally adjusted basis, purchase applications continue to run well above trend. Even with the big decline that went against seasonal norms in the spring (first chart below), the index of YTD purchase applications has averaged 290.1 each week compared to 272.4 last year (second chart below); these are by far the strongest readings of the past decade. For every week since the mid-June 2020 peak (which was later in the year than usual due to pent up demand; denoted by the blue dot in the first chart below), purchase applications have been consistent with seasonal trends, but each week’s reading has been higher year over year by an average of over 24%. This week, thanks to the timing of the Labor Day holiday, the NSA purchase index rose by an even stronger 40% YoY which was by far the strongest reading of any week of this year.

Another housing indicator showing similarly strong demand that we touched on in last night’s Closer was the July version of Black Knight’s monthly Mortgage Monitor.  Although it is at a greater lag than MBA’s readings, this was yet another data point pointing to strong housing demand as new originations in June (lagged an extra month to the rest of the report that covered the month of July) surged to over 1.3 million which was the highest reading since at least 2013; doubling year over year.  The July Mortgage Monitor also indicated that delinquencies as a percentage of all loans have continued to improve, falling to 6.9% compared to its recent peak of 7.76% back in May. Albeit improved, the delinquency rate is still elevated at its highest levels since early 2013/late 2012.  Click here to view Bespoke’s premium membership options for our best research available.

Bespoke co-founder Paul Hickey appeared on CNBC’s Squawk Box this morning to discuss the outlook for large-cap tech stocks and the broader market. To view the segment, please click on the image below. Click here to view Bespoke’s premium membership options for the best market analysis available.

In today’s Morning Lineup, we showed an update of our ETF Performance Matrix, which summarized the performance of key ETFs across asset classes on a YTD and MTD basis as well as since the March 23rd low.  In looking through the matrix, it’s clear that much of the declines that equities have seen since the start of September have been a reversal of what we saw for equities coming off the March lows through now.  As noted, the Nasdaq has been underperforming small caps this month, value has been outperforming growth across all market cap ranges, and international stocks are mostly outperforming US equities.  From the March lows through the start of September, though, it was the Nasdaq, growth, and US stocks that were outperforming the small caps, value, and international stocks.

One way to illustrate this relationship is in a scatter plot below comparing the performance of each equity-related ETF in the matrix from the lows on 3/23 (y-axis) versus their performance in September through Tuesday’s close (x-axis).  Looking at it this way, there is a pretty clear inverse relationship between performance over these two time periods.  As another example, the top ten performing of the 50 equity related ETFs in the matrix so far this September had an average rank of 36 in their performance off the March lows.  Conversely, the ten worst performing ETFs in the Matrix so far this month had an average rank of 16 in their performance of the march lows.  Every dog has their day, and the ‘dogs’ of the market off the March lows have been holding up very well on a relative basis so far in September.  Click here to view Bespoke’s premium membership options for the best market analysis available.

In an earlier post, we detailed the results of the August report on small business optimism from the NFIB.  Additionally, the monthly report surveys respondents on what are their biggest concerns.  As shown below, Quality of Labor was unchanged as the biggest concern in August with 21% of businesses reporting as such.  Cost of Labor, on the other hand, is less of a concern with only 9% reporting this as their biggest problem.  Although it is in the middle of the road compared to other issues, that is elevated relative to the rest of history with that reading in the upper 5% of all readings.  Behind Quality of Labor, Taxes are the next biggest issue for businesses at 17%.  In the same vein, Government Red Tape and Requirements were also lower falling 3 percentage points to 11% in August.  Finally, Poor Sales ranks as the third largest concern, rising 2 percentage points to 15%.  That snapped a streak of three straight months of improvements in this reading and runs contrary to many other data points that have pointed to a continued turnaround in demand.

Overall, labor and government-related concerns on a combined basis account for more than half of businesses’ biggest issues. For costs or quality of labor, the 30% combined reading has been on the rise for three straight months now, but is still off the peak of 36% from late last year.  Overall, that can actually be taken as a fairly positive sign for the labor market as it indicates that jobs are at least available.  Click here to view Bespoke’s premium membership options for our best research available.

Early this morning the NFIB released the results of small business optimism for the month of August.  The headline index rose 1.4 points to 100.2.  That was better than expectations of 99.0 which would have been only slightly higher than July’s reading of 98.8.  That indicates overall improved sentiment for small businesses in August though it remains far lower than levels from prior to the pandemic.

Of the ten individual components of the optimism index, most rose in August.  Only two, Expectations for the Economy to Improve and Expectations for Real Sales to be Higher, fell while Plans to Make Capital Outlays was unchanged. The index that saw the biggest jump was for Actual Earnings Changes which rose 7 points to -25.  That was the most that the index has risen in a single month since November of last year, but it still leaves it at the low end of the past decade’s range.

There is still a historically low level for expectations of future sales to be higher. That index was one of the two to fall in August as it is at its lowest level since October of 2016. Despite what appears like weak demand expectations, the net percent of owners viewing current inventories as too low stands at 3% which is in the 99th percentile of all readings.  The current reading of 3 is the highest since February of 1997. As such, a higher share of businesses plan to increase inventories.

The indices covering employment were another strong point of this month’s survey.  On a net basis, 21% of owners plan to increase employment which is up from 18 last month and stands in the top 5% of all readings.  That index is currently right back to where it was before the pandemic began.  Similarly, businesses are increasingly reporting job openings are hard to fill.  That index rose another 3 points to 33 and is in the upper decile of historical readings.  While improved and strong versus history, that index is much more muted relative to pre-pandemic levels than the index for Plans to Increase Employment.

Although they are not necessarily inputs into the headline number for the optimism index, some of the indices for actual changes shed some additional light on the picture for small businesses.  For example, the index for Actual Sales Changes rose this month to -15 from -28 in July.  That is tied with December of 1986 for the third-largest one month increase on record and the first back to back months with sequentially higher readings since November. While this still means that more businesses are reporting lower than higher sales, it also indicates that sales are continuing to turn around a bit. Meanwhile, fewer and fewer businesses are making capital expenditures.  That index fell to 47 which means only 47% of businesses reported capital outlays in the last six months.  That’s the lowest level since December of 2010. On the other side of the production function, labor also fell in August.  The index for Actual Employment Changes fell 1 point to -12. Unlike for Capital Expenditures, though, that is not a fresh low.

There is also an interesting divergence in readings on credit conditions.  As conditions remain accommodative, the index for Availability of Loans is at its joint highest reading on record (this index only goes back to 2004). Despite this, only 24% of owners reported borrowing on a regular basis.  That is a record low reading.Click here to view Bespoke’s premium membership options for our best research available.