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Markets search for direction as energy sector drags stocks down

Yahoo Finance Live's Seana Smith and Dave Briggs take a look at the market outlook, as well as the bond market, crude oil pricing, and sector laggards.

Video transcript

SEANA SMITH: All right, Rachelle, let's take a look at where things stand. You mentioned the fact that we're coming off the best month that we've seen since [INAUDIBLE]. Your averages, the Dow basically at the flatline. NASDAQ was up about 1% in earlier trading. Now it's flat as well. S&P off just about 2/10 of a percent. I think investors are trying to figure out what exactly this means for Fed policy going forward.

DAVE BRIGGS: Yeah, it seems like the markets maybe overreacted a little bit to some passive language from Jerome Powell. Recessionary fears are overestimating that Fed pause. A couple of notes we have on that.


Morgan Stanley chief US equity strategist Michael Wilson saying in a note, "very small window for stocks to work before earnings surprise and a downside." And a note from Bank of America, Seana, talked about they mark-- they gauge 10 signals, and 30% of those signals say the worst is not yet over for stocks. That's from BoA.

SEANA SMITH: Yeah, and you take a look at the year-to-date chart that we have for the S&P, still off about 13% year-to-date, so we have a wide margin here to make up for some of the ground that we lost. Let's take a look at yields. When we talk about some concern in the equity markets, we're seeing that reflected in the bond market today.

We were just about at 261, as you can see there, off about three basis points, the lowest level that we've hit since April. And taking a look for some good news, maybe at least on the consumer side of things, let's pull up crude because, finally, some relief there. We're pulling down once again today.

DAVE BRIGGS: Yeah, it is a good consumer story because price of gas is $4.21. That's down 60-plus cents in a month. But Brent and WTI, a huge hit today, down 3% and down 4%, really based on some data out of China that represents a bit of a pullback in demand there. That is a good consumer story, bad investor story. All energy stocks took a hit today.

SEANA SMITH: Yeah, it certainly is. And as we take a look at some of these movers within the energy market, as we pull this up a little bit, sector action, we're also seeing it reflected a bit there. You mentioned the underperformance of energy, we can see is the worst-performing sector today, off just about 2%. Bucking the downward trend, consumer staples, consumer discretionary, and industrial. So a bit of a mixed trade there leading today's action.

DAVE BRIGGS: All right. For more on the markets, let's bring in Barry Bannister, Stifle chief equities