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“The eyes are more exact witnesses than the ears.” – Herclitus

Yesterday was an ugly day, although many people we spoke with were surprised that both the S&P 500 and Nasdaq had similar but larger reversals back in June, so it’s not as though the move was unprecedented.  There’s no arguing the market was a bit frothy, especially in large-cap tech, heading into Thursday’s rout, so some mean reversion is to be expected.

In the short-term, the worst may not be over for big-tech.  It remains the most overbought sector of the market, and continued tensions with China, the latest being reports that the country will increase support for its domestic semiconductor industry, only adds to the tensions.

In Europe, the region is seeing its second straight day of disappointing economic data.  The focus for the short-term in US markets, though, is the August Non-Farm Payrolls report.  Economists were expecting 1.35 million jobs, the Unemployment Rate is expected to drop back below 10% to 9.8%, and average hourly earnings are expected to remain unchanged.  The actual results were much stronger than expected.  While job creation was only slightly better than expected (1.371 million), the Unemployment Rate dropped to 8.4%, and Average Hourly Earnings increased 0.4%.

Be sure to check out today’s Morning Lineup for a rundown of the latest stock-specific news of note, market performance in the US and Europe, trends related to the COVID-19 outbreak, and much more.

As mentioned above, even after yesterday’s sell-off, many sectors remain overbought.  In fact, the only sectors not trading more than a standard deviation above their 50-day moving averages (DMA) are Utilities, Health Care, and Energy.  Energy is also the only sector currently trading below its 50-DMA, while Technology is still trading 7.2% above its 50-DMA, which ranks third of the eleven sectors just slightly behind Communication Services (+7.24%) and Consumer Discretionary (+7.23%).