| | | Stocks keep rally going, cyclical and value stocks outperformed
05-Aug-20 16:20 ET
Dow +373.05 at 27201.52, Nasdaq +57.23 at 10998.47, S&P +21.26 at 3327.77
briefing.com
[BRIEFING.COM] The S&P 500 advanced 0.6% on Wednesday, as gains broadened out to many of the cyclical and value-oriented stocks. The Nasdaq Composite increased 0.5% to close at another record high, while the Dow Jones Industrial Average (+1.4%) and Russell 2000 (+1.9%) rose more than 1.0%.
Investors welcomed reports that lawmakers made progress toward the next coronavirus relief bill, a promising-sounding vaccine update from Novavax (NVAX 173.49, +16.32, +10.4%) on a Phase 1/2 trial for healthy adults ages 18-59, and the ISM Non-Manufacturing Index increasing to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June.
The news fed into the recovery/reopening optimism that lifted the cyclical S&P 500 industrials (+2.0%), materials (+1.5%), and financials (+1.5%) sectors into the top spots today. The big move in Novavax also kept the spirit alive in other momentum trades like in Amazon (AMZN 3205.03, +66.20, +2.1%), which carried the consumer discretionary sector (+1.4%) higher.
Walt Disney (DIS 127.61, +10.32, +8.8%) was the biggest gainer within the Dow, with shares climbing 9% after impressing shareholders with strong subscriber numbers for its streaming platform. The company also reported a surprise quarterly profit.
Laggards were found primarily in the defensive-oriented utilities (-1.3%), real estate (-0.6%), and consumer staples (-0.2%) sectors. Generally, it was also a tough day for growth stocks, except Square (SQ 146.20, +9.37, +6.9%), which rallied to fresh record highs following its earnings report.
Shares of Teladoc (TDOC 202.01, -47.41, -19.0%) and Livongo Health (LVGO 128.06, -16.47, -11.4%) pulled back sharply after the companies agreed to merge in a $18.5 billion cash-and-stock deal.
U.S. Treasuries retraced a bulk of the moves from Tuesday. The 2-yr yield declined one basis point to 0.11%, while the 10-yr yield increased three basis points to 0.54%. The U.S. Dollar Index fell 0.5% to 92.89. WTI crude futures gained 1.2%, or $0.56, to $42.24/bbl, hitting a five-month high in the process.
Reviewing Wednesday's economic data:
- The ISM Non-Manufacturing Index increased to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June. This was the third straight monthly improvement and the highest reading for the index since February 2019.
- The key takeaway from the report is the recognition that the Employment Index fell even as business activity improved some, which suggests a reticence on the part of employers to bring on new employees given the heightened state of uncertainty about the demand outlook.
- The Trade Balance report for June showed a narrowing of the trade deficit to $50.7 billion (Briefing.com consensus -$49.3 billion) from a downwardly revised $54.8 billion (from -$54.6 billion) in May.
- The key takeaway from this more dated report is that export and import activity increased in June as economies were reopening following the suppressed activity from March to May.
- The ADP Employment Change report for July estimated 167,000 jobs were added private-sector payrolls (Briefing.com consensus 1.600 million), which was well below expectations.
- The June trade balance report showed a deficit of $50.7 billion (Briefing.com consensus -$53.0 billion). The May deficit was revised up to $54.8 billion from $54.6 billion.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.
- Nasdaq Composite +22.6% YTD
- S&P 500 +3.0% YTD
- Dow Jones Industrial Average -4.7% YTD
- Russell 2000 -7.3% YTD
Market Snapshot
| Dow | 27201.52 | +373.05 | (1.39%) | | Nasdaq | 10998.47 | +57.23 | (0.52%) | | SP 500 | 3327.77 | +21.26 | (0.64%) | | 10-yr Note | -26/32 | 0.552 |
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| | NYSE | Adv 2041 | Dec 923 | Vol 899.5 mln | | Nasdaq | Adv 2201 | Dec 1070 | Vol 4.0 bln |
Industry Watch
| Strong: Financials, Materials, Industrials, Consumer Discretionary, Energy |
| | Weak: Real Estate, Utilities, Consumer Staples |
Moving the Market
-- Cyclical and value-oriented stocks outperformed, leading S&P 500 to fourth straight advance
-- Positive developments on stimulus talks, vaccine progress, earnings reports
-- Walt Disney (DIS) climbs 9% after reporting strong subscriber numbers
-- ISM Non-Manufacturing Index for July increased more than expected
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WTI crude hits 5-month high
05-Aug-20 15:30 ET
Dow +316.75 at 27145.22, Nasdaq +47.06 at 10988.30, S&P +18.60 at 3325.11
[BRIEFING.COM] The S&P 500 is up 0.6% and is on pace to close higher for the fourth straight session.
One last look at the S&P 500 sectors shows eight trading higher and three trading lower. Materials (+1.8%), industrials (+1.4%), and financials (+1.6%) remain in the lead as part of the cyclical trade today, while the utilities (-1.2%), real estate (-0.7%), and consumer staples (-0.4%) sectors trade lower.
WTI crude futures hit a 5-month high but settled well off session highs with a 1.2% gain (+$0.56) at $42.24/bbl. |
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