Stocks edged higher ahead of stimulus update
20-Oct-20 16:20 ET
Dow +113.37 at 28308.73, Nasdaq +37.61 at 11516.42, S&P +16.20 at 3443.12
briefing.com
[BRIEFING.COM] The S&P 500 gained 0.5% on Tuesday, although it was up as much as 1.5% ahead of a stimulus meeting between House Speaker Pelosi and Treasury Secretary Mnuchin. The Nasdaq Composite increased 0.3%, the Dow Jones Industrial Average increased 0.4%, and the Russell 2000 increased 0.3%.
Yesterday reports suggested a stimulus deal wasn't looking imminent, but comments from the House Speaker after Monday's close provided the market hope that both sides would get something done soon. Senate Majority Leader McConnell said he would bring a presidentially supported bill to the floor if it passes the House but reportedly wants a deal after the election.
Ms. Pelosi and Mr. Mnuchin were still negotiating at market's close, which may have caused some hedging activity for any disappointment. Nevertheless, ten of the 11 S&P 500 sectors still closed higher, led by the energy (+1.2%), financials (+0.8%), and communication services (+0.8%) sectors, while the consumer staples sector (-0.1%) closed lower.
Energy stocks benefited from higher oil prices ($41.51/bbl, +0.67, +1.6%); financial stocks benefited from curve-steepening activity due to selling on the longer-end of the curve; and Alphabet (GOOG 1555.93, +21.32, +1.4%) was a bright spot in the communication services sector despite the Department of Justice filing an antitrust lawsuit against Google.
Other measures of support included commentary that Moderna's (MRNA 71.31, +0.35, +0.5%) COVID-19 vaccine could be available in December, encouraging housing starts and building permits data for September, and better-than-expected earnings reports from Dow components Procter & Gamble (PG 142.48, +0.57, +0.4%) and Travelers (TRV 118.11, +6.27, +5.6%).
Conversely, notable earnings-related laggards included IBM (IBM 117.37, -8.15, -6.5%) and Philip Morris International (PM 73.33, -4.51, -5.8%). Intel (INTC 53.43, -1.15, -2.1%) struggled after confirming it will sell its NAND memory business to SK Hynix for $9 billion.
Recapping the moves in the Treasury market, selling in longer-dated maturities drove yields higher on the prospects that a large stimulus package would spur economic growth/inflation. The 2-yr yield was flat at 0.15%, while the 10-yr yield rose four basis points to 0.80%. The U.S. Dollar Index fell 0.4% to 93.08.
Reviewing Tuesday's economic data:
- Total housing starts increased 1.9% m/m in September to a seasonally adjusted annual rate of 1.415 million units (Briefing.com consensus 1.430 million). Total building permits jumped 5.2% m/m to 1.553 million (Briefing.com consensus 1.510 million).
- The key takeaway from the report is that there was robust growth in both single-unit starts (+8.5% m/m) and permits (+7.8% m/m), which reflects underlying strength in the market for single-family homes.
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the Fed Beige Book for September on Wednesday.
- Nasdaq Composite +28.4% YTD
- S&P 500 +6.6% YTD
- Dow Jones Industrial Average -0.8% YTD
- Russell 2000 -3.0% YTD
Market Snapshot
| Dow | 28308.73 | +113.37 | (0.40%) | | Nasdaq | 11516.42 | +37.61 | (0.33%) | | SP 500 | 3443.12 | +16.20 | (0.47%) | | 10-yr Note | -2/32 | 0.796 |
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| | NYSE | Adv 2002 | Dec 953 | Vol 755.3 mln | | Nasdaq | Adv 1835 | Dec 1562 | Vol 3.4 bln |
Industry Watch
| Strong: Financials, Energy, Communication Services |
| | Weak: Consumer Staples |
Moving the Market
-- Stocks edged higher ahead of stimulus update
-- Earnings reports were mostly better than expected
-- Energy and financial stocks outperformed amid higher oil prices, curve-steepening activity
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WTI crude futures settle higher to support energy stocks
20-Oct-20 15:25 ET
Dow +152.09 at 28347.45, Nasdaq +56.13 at 11534.94, S&P +21.92 at 3448.84
[BRIEFING.COM] The S&P 500 is up 0.5% to further decline from prior highs as the stimulus meeting between House Speaker Pelosi and Treasury Secretary Mnuchin gets underway.
One last look at the S&P 500 sectors shows energy (+1.1%) claiming today's top spot and is the only sector trading higher by at least 1.0%. The consumer staples sector (-0.1%) trades lower amid a disappointing earnings reaction in Philip Morris International (PM 73.46, -4.35, -5.6%).
WTI crude futures settled higher by 1.6%, or $0.67, to $41.51/bbl. The higher oil prices have provided the energy sector a boost. |
