Market Snapshot
briefing.com
| Dow | 32654.59 | +431.17 | (1.34%) | | Nasdaq | 11984.52 | +321.73 | (2.76%) | | SP 500 | 4088.86 | +80.85 | (2.02%) | | 10-yr Note | -9/32 | 2.983 |
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| | NYSE | Adv 2281 | Dec 821 | Vol 1.0 bln | | Nasdaq | Adv 3290 | Dec 1134 | Vol 4.9 bln |
Industry Watch
| Strong: Information Technology, Materials, Financials, Consumer Discretionary |
| | Weak: Consumer Staples |
Moving the Market
-- Improved sentiment regarding economic growth
-- Contrarian-minded rally effort
-- Powell-induced volatility
-- Treasury yields shoot higher
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Stocks rally in feel-good session
17-May-22 16:15 ET
Dow +431.17 at 32654.59, Nasdaq +321.73 at 11984.52, S&P +80.85 at 4088.86
[BRIEFING.COM] The S&P 500 rose 2.0% on Tuesday, as the market was supported by a contrarian mindset and a reprieve in growth concerns. The Nasdaq Composite (+2.8%) and Russell 2000 (+3.2%) raced ahead the benchmark index with about 3% gains while the Dow Jones Industrial Average rose 1.3%
Ten of the 11 S&P 500 sectors closed higher by at least 1.0%, including five sectors with gains over 2.0%. The information technology sector (+2.9%) claimed the top spot, while the consumer staples sector (-1.2%) was the lone holdout amid an 11% drop in Walmart (WMT 131.35, -16.86, -11.4%) following its disappointing earnings results and guidance.
The contrarian mindset today was rooted in a BofA Global Fund Manager Survey that showed cash levels at their highest position (6.1%) since 9/11 and the largest underweight position in equities since May 2020. Growth concerns were alleviated by the following developments:
Home Depot (HD 300.95, +4.93, +1.7%) reported better-than-expected earnings results and guidance, United Airlines (UAL 46.97, +3.43, +7.9%) increased its Q2 unit revenue outlook, total retail sales for April rose 0.9% as expected, retail sales excluding autos rose 0.6% (Briefing.com consensus 0.3%), and industrial production for April jumped 1.1% (Briefing.com consensus 0.9%).
In addition, Shanghai reported no new COVID cases for three straight days outside quarantined zones, further supporting its reopening initiative. On a related note, Hong Kong plans to relax coronavirus restrictions later this week while Japan plans to allow small groups of tourists to enter the country this month.
An improved growth perspective helped tame inflation concerns, which were highlighted by Walmart and Fed Chair Powell at a Wall Street Journal virtual event. Home Depot also mentioned inflation pressures, which contributed to an 8.2% yr/yr decline in customer transactions in the first quarter.
Mr. Powell said the Fed will be more aggressive with rate hikes if inflation doesn't come down in a clear way, but he did preface the comment with an observation that the Fed can be less aggressive if inflation does clearly come down. This was largely consistent with his prior view on monetary policy.
The Treasury market was in sync with rate-hike and inflation expectations, as well as with the general upbeat mood on Wall Street. The 2-yr yield rose nine basis points to 2.67%, and the 10-yr yield rose nine basis points to 2.97%. The U.S. Dollar Index fell 0.8% 103.35. WTI crude futures fell 1.4%, or $1.59, to $112.21/bbl.
Reviewing Tuesday's economic data:
- Total retail sales increased 0.9% month-over-month in April (Briefing.com consensus 1.1%) following an upwardly revised 1.4% increase (from 0.5%) in March. Excluding autos, retail sales rose 0.6% (Briefing.com consensus 0.3%) after increasing an upwardly revised 2.1% (from 1.1%) in March.
- The key takeaway from the report, which is not adjusted for inflation, is that higher pricing helped in the sales growth, yet spending increased across most discretionary categories.
- Total industrial production increased 1.1% month-over-month in April (Briefing.com consensus 0.5%), marking the fourth consecutive month of gains of 0.8% or greater. The capacity utilization rate increased to 79.0% (Briefing.com consensus 78.6%) from a downwardly revised 78.2% (from 78.3%) in March.
- The key takeaway from the report is that it shows ongoing strength in industrial production and exposed the potential for further strength as motor vehicle production is expected to improve with any improvement in supply chains, particularly for semiconductors.
- The NAHB Housing Market Index for May decreased to 69 (Briefing.com consensus 75) from 77 in April.
- Business inventories increased 2.0% m/m in March (Briefing.com consensus 1.9%) following a revised 1.8% increase (from +1.5%) in February.
Looking ahead, investors will receive Housing Starts and Building Permits for April and the weekly MBA Mortgage Applications Index on Wednesday.
- Dow Jones Industrial Average -10.1% YTD
- S&P 500 -14.2% YTD
- Russell 2000 -18.0% YTD
- Nasdaq Composite -23.4% YTD
Ten of the 11 sectors up
17-May-22 15:35 ET
Dow +439.14 at 32662.56, Nasdaq +321.16 at 11983.95, S&P +81.04 at 4089.05
[BRIEFING.COM] Heading into the close, the S&P 500 is up by 1.8% and still comfortably above the 4,050 level.
Ten out of 11 S&P 500 sectors are up. Consumer staples (-1.3%), the lone sector experiencing losses going into the close, is still being dragged down by Walmart (WMT 131.55, -16.62, -11.2%). Adding to the downward trend is Procter & Gamble (PG 154.46, -0.63, -0.4%) and Kroger (KO 65.74, -0.23, -0.3%). Information technology (+2.9%), materials (+2.9%), financials (2.8%), and consumer discretionary (+2.5%) are up the most. Amazon.com (AMZN 2299.81, +83.60, +3.8%) is leading the upward trend with a 3.8% gain; Home Depot (HD 303.62, +7.59, +2.6%) is also pulling up the sector with a 2.4% gain.
Crude oil futures settled lower by $1.59 (-1.4%) to $112.21/barrel.
Powell reiterates policy viewpoint
17-May-22 15:00 ET
Dow +398.20 at 32621.62, Nasdaq +282.30 at 11945.09, S&P +71.42 at 4079.43
[BRIEFING.COM] The S&P 500 is up 1.7% after seeing some minor volatility following Fed Chair Powell's comments about the Fed being more aggressive with rate hikes if inflation doesn't come down in a clear way. He did, however, say that the Fed can be less aggressive if inflation does clearly come down.
The Treasury market has been largely unchanged following these comments, but the price action accurately reflects rate-hike expectations and inflation pressures with yields trading higher across the curve. The 2-yr yield is up nine basis points to 2.67%, and the 10-yr yield is up nine basis points to 2.97%.
The fed funds futures market is assigning a probability of 87.0% for a 50-basis-point rate hike in June, according to the CME FedWatch Tool -- roughly unchanged from yesterday and a week ago. That's unsurprising since Mr. Powell essentially reiterated his prior viewpoint on policy.
Markets dip slightly on Powell comments; PARA, CE outperform on Berkshire stakes
17-May-22 14:30 ET
Dow +204.23 at 32427.65, Nasdaq +179.52 at 11842.31, S&P +44.78 at 4052.79
[BRIEFING.COM] The markets have dipped lower as Fed Chair Jerome Powell's WSJ interview commenced; of his key excerpts, Mr. Powell suggested the Fed would need to be more aggressive with rate hikes if inflation does not come down in a clear and convincing way.
S&P 500 constituents Paramount Global (PARA 31.85, +3.83, +13.67%), Take-Two (TTWO 122.10, +11.99, +10.89%), and Celanese (CE 154.93, +10.25, +7.08%) pepper the top of today's standings. PARA and CE gain in light of Berkshire Hathaway's 13F disclosures, while TTWO outperforms after last night's earnings.
Meanwhile, grocery chain Kroger (KR 50.95, -2.25, -4.23%) underperforms after Walmart (WMT 131.03, -17.18, -11.59%) said in its results that it took share in grocery despite higher labor and fuel costs.
Gold ends higher amid weaker dollar
17-May-22 14:00 ET
Dow +333.00 at 32556.42, Nasdaq +245.41 at 11908.20, S&P +63.21 at 4071.22
[BRIEFING.COM] With about two hours to go the tech-heavy Nasdaq Composite (+2.10%) remains today's best-performing index.
Gold futures settled $4.90 higher (+0.3%) to $1,818.90/oz, aided in part by a decent decline in the greenback.
Meanwhile, the U.S. Dollar Index slips -0.8% to $103.33.
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