In order for a trading instrument to reverse a trend, it needs a catalyst. This recent rally was rudely interrupted by a downgrade of US debt from AAA to AA+ just after 5 PM EST on Tuesday.
The swift decline in premarket trading was precursor to the price action in the regular session. At the commencement of premarket trading, the index found support just under last week’s low (4552.25 vs. 4553.75) and had a significant rebound.
However, another wave of sellers thrashed the index off the opening of the regular session and took the index nearly 20 handles under the premarket low, falling to 4534.25.
In the final hours, the bears pressed to end the session on the lows, but bulls made a stand at the index’s July 17 low (4528) as the index bottomed at 4527.75.
Despite a large sell imbalance, the index trimmed its losses in the final fifteen minutes with a closing print lower by 64 handles at 4537.25.
Among the top components, Johnson & Johnson (NYSE: JNJ) was the biggest winner. The issue benefited from investors’ defensive posture on this risk-off day and added $1.02 or 0.6% at the closing price of $169.91.
That was over 2% better than the cash index’s decline of 1.38%.
Conversely, Nvidia Corp (NASDAQ: NVDA) was the biggest loser of the top components. The Street’s violent reaction to Advanced Micro Devices Inc. (NASDAQ: AMD) weighed heavily on the issue. As a result, it swooned $22.24 or 4.8% at the closing price of $442.83 That extended its losing streak to three sessions.