| | | Bull market finds broad participation
02-Sep-20 16:20 ET
Dow +454.84 at 29090.50, Nasdaq +116.78 at 12056.45, S&P +54.19 at 3580.84
briefing.com
[BRIEFING.COM] The S&P 500 rose 1.5% on Wednesday for its 22nd record close of the year, as the bull market found strong support from a wide range of equities. The Nasdaq Composite also set new records with a 1.0% gain. The Dow Jones Industrial Average rose 1.6%, and the Russell 2000 rose 0.9%.
Ten of the 11 S&P 500 sectors closed in positive territory, with gains ranging from 0.9% (information technology) to 3.1% (utilities). Only the energy sector (-0.4%) closed lower, largely due to the decline in oil prices ($41.54/bbl, -1.22, -2.9%).
Today was an impressive day not just because of the index gains, but because sentiment wasn't deterred by the profit taking in Apple (AAPL 131.40, -2.78, -2.1%), Tesla (TSLA 447.37, -27.68, -5.8%), and Zoom Video (ZM 423.56, -34.13, -7.5%).
There were no new macro catalysts to explain today's record-setting performance, so one could reasonably assume that a fear of missing out, momentum trading, coronavirus optimism, or the Fed might have continued to play key roles. On a related note, the Fed's Beige Book observed an improvement in activity for most Districts into August.
Street-high analyst calls were other positive factors. BoA Securities raised its price target on NVIDIA (NVDA 573.86, +21.02, +3.8%) to $650 from $600, Cowen raised its price target on Costco (COST 358.86, +7.48, +2.1%) to $410 from $370, and JP Morgan raised its price target on Peloton (PTON 91.06, +7.39, +8.8%) to $105 from $58.
Interestingly, optimism in the growth outlook might not have played a role in today's gains. For instance, the U.S. Treasury curve experienced some curve-flattening activity due to an uptick in longer-dated Treasuries. The 2-yr yield increased two basis points to 0.13%, while the 10-yr yield declined two basis points to 0.65%. The U.S. Dollar Index increased 0.4% to 92.67.
Some might have blamed the relatively underwhelming ADP Employment Change report, which estimated 428,000 jobs were added private-sector payrolls in August, versus the Briefing.com consensus of 1.210 million.
Reviewing Wednesday's economic data:
- Factory orders in July increased 6.4% m/m (Briefing.com consensus 5.7%) following an upwardly revised 6.4% increase (from 6.2%) in June. This is the third straight monthly increase in factory orders following a 13.5% decline in April and an 11.0% decline in March.
- The key takeaway from the report is the affirmation that business spending picked up in July, evidenced by a 1.9% increase in new orders for nondefense capital goods excluding aircraft that was unchanged from the Advance Durable Goods Orders report.
- The ADP Employment Change Report for August showed a slowdown from the pace of rehiring activity seen in May and June. To that end, it was estimated that 428,000 jobs were added to private-sector payrolls.
- The weekly MBA Mortgage Applications Index declined 2.0% following a 6.5% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the ISM Non-Manufacturing Index for August, the Trade Balance report for July, and the revised Q2 Productivity and Unit Labor Costs on Thursday.
- Nasdaq Composite +34.4% YTD
- S&P 500 +10.8% YTD
- Dow Jones Industrial Average +2.0% YTD
- Russell 2000 -4.6% YTD
Market Snapshot
| Dow | 29090.50 | +454.84 | (1.59%) | | Nasdaq | 12056.45 | +116.78 | (0.98%) | | SP 500 | 3580.84 | +54.19 | (1.54%) | | 10-yr Note | +3/32 | 0.644 |
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| | NYSE | Adv 1920 | Dec 1014 | Vol 885.5 mln | | Nasdaq | Adv 1957 | Dec 1353 | Vol 3.9 bln |
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