Cyclical stocks lead Wall Street higher following trade news, data, earnings
25-Sep-19 16:15 ET
Dow +162.94 at 26970.71, Nasdaq +83.76 at 8077.38, S&P +18.27 at 2984.91
briefing.com
[BRIEFING.COM] The S&P 500 gained 0.6% on Wednesday, as upbeat trade news and strong economic data and earnings helped investors brush aside impeachment concerns. The Dow Jones Industrial Average also increased 0.6%, while the Nasdaq Composite (+1.1%) and Russell 2000 (+1.1%) outperformed after leading yesterday's decline.
The stock market struggled for direction to begin the day, with the S&P 500 dipping to session lows (-0.5%) just before new home sales for August and the notes taken from President Trump's call with Ukrainian President Zelensky were released at 10:00 a.m. ET.
The annual pace of new home sales for August (713,000) exceeded the Briefing.com consensus of 659,000 and was one of the highest readings since October 2007. Regarding the notes, the Department of Justice said there was no indication of any violation of campaign finance laws.
Safe-haven assets like gold ($1513.10/ozt, -$27.60, -1.8%) and U.S. Treasuries began to sell off, with some curve-steeping activity contributing to the gains in the S&P 500 financials sector (+0.7%). Trade-sensitive areas like the information technology (+1.2%) and consumer discretionary (+1.0%) sectors gained traction after President Trump said a trade deal with China could "come sooner than you think."
Likewise, the Dow Jones Transportation Average (+1.0%) and Philadelphia Semiconductor Index (+1.8%) finished with noticeable gains as the broader market steadily increased throughout the day. The defensive-oriented health care (-0.5%), real estate (-0.1%), and utilities (-0.1%) sectors were the lone S&P 500 sectors to finish in negative territory.
Nike (NKE 90.81, +3.63, +4.2%) and Cintas (CTAS 266.62, +14.48, +5.7%) padded the advance after both beat top and bottom-line estimates, with Cintas issuing upside FY20 EPS guidance. Philip Morris International (PM 75.28, +3.72, +5.2%) outperformed after it ended merger talks with Altria (MO 40.56, -0.17, -0.4%) as scrutiny of Juul/vaping intensified. Altria owns a stake in Juul.
The 2-yr yield increased six basis points to 1.67%, and the 10-yr yield increased ten basis points to 1.73%. The U.S. Dollar Index rose 0.7% to 99.03 amid weakness in the euro and British pound. WTI crude lost 1.3%, or $0.76, to $56.56/bbl, extending its recent pullback as inventories unexpectedly increased, according to the weekly report from the EIA.
Reviewing Wednesday's economic data, which included New Home Sales for August and the weekly MBA Mortgage Applications Index:
- New home sales surged 7.1% m/m to a seasonally adjusted annual rate of 713,000 units (Briefing.com consensus 659,000) from an upwardly revised 666,000 (from 635,000) in July. August trailed only June as the highest-paced sales month since October 2007.
- The key takeaway from the report is that the strength underscores the impact of low mortgage rates on buyer demand, as the higher-priced West region saw the biggest increase among all regions.
- The weekly MBA Mortgage Applications Index fell 10.1% following a 0.1% decline in the prior week.
Looking ahead, investors will receive the following reports on Thursday: the third estimate for Q2 GDP, the weekly Initial and Continuing Claims report, Pending Home Sales for August, and the Advance reports for International Trade in Goods, Retail Inventories, and Wholesale Inventories.
- Nasdaq Composite +21.7% YTD
- S&P 500 +19.1% YTD
- Dow Jones Industrial Average +15.6% YTD
- Russell 2000 +15.0% YTD
Market Snapshot
| Dow | 26970.71 | +162.94 | (0.61%) | | Nasdaq | 8077.38 | +83.76 | (1.05%) | | SP 500 | 2984.91 | +18.27 | (0.62%) | | 10-yr Note | -7/32 | 1.728 |
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| | NYSE | Adv 1791 | Dec 997 | Vol 839.7 mln | | Nasdaq | Adv 1817 | Dec 1268 | Vol 2.0 |
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