Stocks rebound with a little help from the Fed
15-Jun-20 16:20 ET
Dow +157.62 at 25763.18, Nasdaq +137.21 at 9726.04, S&P +25.28 at 3066.46
briefing.com
[BRIEFING.COM] The S&P 500 gained 0.8% on Monday to overcome an early 2.5% decline, as the market brushed aside coronavirus concerns and welcomed another aggressive policy update from the Fed. The Dow Jones Industrial Average swung nearly 1000 points from its bottom to close 0.6% higher. The Nasdaq Composite (+1.4%) and Russell 2000 (+2.3%) outperformed.
The early weakness was attributed to reports about increasing rates of coronavirus cases and hospitalizations in several U.S. states and even an outbreak at a food market in Beijing. Underwhelming industrial production and retail sales data for May out of China also weighed on recovery sentiment.
All 11 S&P 500 sectors traded sharply lower, but buyers gradually returned to buy the dip, which contributed to a steady rebound off early lows. Then, at 2:00 p.m. ET, the rebounding market received a noticeable pop into positive territory after the Fed announced it will start buying individual corporate bonds through its Secondary Market Corporate Credit Facility.
The move was unexpected, but it reminded the market that the Fed can, and will, expand its policy tools to support the market at any time during this recovery. All 11 S&P 500 sectors ended the session in positive territory.
The financials sector (+1.4%) outperformed, even as banks noted a steady pace of net credit losses in May, followed by the consumer staples sector (+1.1%). The health care (+0.2%) and energy (+0.1%) sectors eked out small gains.
Stay-at-home stocks continued to outperform the broader market amid the threat of a second wave of coronavirus infections. Shopify (SHOP 805.47, +62.89, +8.5%) was a notable standout after announcing a new partnership with Walmart (WMT 118.08, +0.34, +0.3%).
U.S. Treasuries exhibited an early flight-to-safety trade, which then unraveled with the rebound in equities. The 2-yr yield and the 10-yr yield ended the session unchanged at 0.18% and 0.70%, respectively. The U.S. Dollar Index declined 0.6% to 96.71. WTI crude futures rose 1.9%, or $0.68, to $36.94/bbl.
Monday's economic data was limited to the Empire State Manufacturing Survey for June, which improved to -0.2 (Briefing.com consensus -25.0) from -48.5 in May.
Looking ahead to Tuesday, investors will receive Retail Sales for May, Capacity Utilization and Industrial Production for May, Business Inventories for May, and the NAHB Housing Market Index for June. In addition, Fed Chair Powell will provide his semiannual monetary policy testimony.
- Nasdaq Composite +8.4% YTD
- S&P 500 -5.1% YTD
- Dow Jones Industrial Average -9.7% YTD
- Russell 2000 -14.9% YTD
Market Snapshot
| Dow | 25763.18 | +157.62 | (0.62%) | | Nasdaq | 9726.04 | +137.21 | (1.43%) | | SP 500 | 3066.46 | +25.28 | (0.83%) | | 10-yr Note | -1/32 | 0.711 |
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| | NYSE | Adv 1925 | Dec 943 | Vol 1.2 bln | | Nasdaq | Adv 2380 | Dec 934 | Vol 4.4 bln |
Industry Watch
| Strong: Financials, Consumer Staples, Communication Services, Real Estate |
| | Weak: Health Care, Energy |
Moving the Market
-- Market closes higher in buy-the-dip trade
-- Fed said it will start buying individual corporate bonds
-- Early weakness attributed to reports of increasing rates of coronavirus cases and hospitalizations in several states
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WTI crude rises 2%
15-Jun-20 15:20 ET
Dow +131.57 at 25737.13, Nasdaq +125.50 at 9714.33, S&P +22.36 at 3063.54
[BRIEFING.COM] The S&P 500 is up 0.6%, while the Russell 2000 trades higher by 2.1%.
One last look at the S&P 500 sectors shows financials (+1.2%), real estate (+0.9%), and materials (+0.9%) leading in gains, while the health care sector (-0.1%) dips just below its flat line.
WTI crude futures settled the session up $0.68 (+1.9%) to $36.94/bbl. |
