| | | March begins with a strong rebound rally
01-Mar-21 16:15 ET
Dow +603.14 at 31535.51, Nasdaq +396.48 at 13588.85, S&P +90.67 at 3901.82
briefing.com
[BRIEFING.COM] The S&P 500 rallied 2.4% on Monday, as investors indiscriminately bought last week's dip amid a host of positive-sounding developments. The Nasdaq Composite (+3.0%) and Russell 2000 (+3.4%) rose at least 3.0%, while the Dow Jones Industrial Average (+2.0%) followed behind with a 2.0% gain.
All 11 S&P 500 sectors contributed to the steady advance, eight of which advanced more than 2.0%. The information technology (+3.2%) and financials (+3.1%) sectors finished as influential leaders, while the real estate sector (+0.2%) underperformed with a modest gain after a strong start.
From a news perspective, sentiment was boosted after the FDA authorized Johnson & Johnson's (JNJ 159.32, +0.86, +0.5%) COVID-19 vaccine for emergency use, the House passed the $1.9 trillion stimulus bill (handing it over to the Senate), manufacturing PMIs for February out of the U.S., Europe, and Japan exceeded expectations, and Warren Buffett reminded investors to "never bet against America" in his annual shareholder letter.
Specifying the U.S. data, the ISM Manufacturing Index for February jumped to 60.8% (Briefing.com consensus 58.8%) from 58.7% in January, matching the August 2018 reading as the highest since May 2004. It's also worth noting that February was the ninth straight month of expansionary activity (above 50.0%).
Other supporting factors included a calmer Treasury market, first-of-the-month inflows, and a fear of missing on further gains. The latter was likely exacerbated by the recognition that the S&P 500 bounced so strongly off its 50-day moving average (3813) after closing just above it last Friday, which ended on a disappointing note.
In corporate news, United Airlines (UAL 53.31, +0.63, +1.2%) reportedly ordered 25 additional 737 MAX planes from Boeing (BA 224.39, +12.38, +5.8%), Exxon Mobil (XOM 56.40, +2.03, +3.7%) named two new board members, and Royal Caribbean (RCL 91.31, -1.96, -2.1%) priced a common stock offering at $91 per share.
The 2-yr yield decreased two basis points to 0.12%, and the 10-yr yield decreased one basis point to 1.45%. The U.S. Dollar Index increased 0.2% to 91.04. WTI crude futures decreased 1.5%, or $0.91, to $60.54/bbl ahead of an OPEC+ meeting later this week.
Reviewing Monday's economic data:
- The ISM Manufacturing Index for February jumped to 60.8% (Briefing.com consensus 58.8%) from 58.7% in January, matching the August 2018 reading as the highest since May 2004. The dividing line between expansion and contraction is 50.0%. February marked the ninth straight month the ISM Manufacturing Index has been above 50.0%.
- The key takeaway from the report is the recognition that all 18 industries reported paying higher prices for raw materials in February. That contributed to the Prices Index hitting its highest level since May 2008 and should continue to fuel concerns about potential pass-through pressures to end users.
- Total construction spending increased 1.7% m/m in January (Briefing.com consensus 0.6%) after increasing an upwardly revised 1.1% (from 1.0%) in December. Total private construction spending rose 1.7% m/m and total public construction spending increased 1.7%.
- The key takeaway from the report is that the strength was driven by gains in both private and public construction spending.
- The February IHS Markit Manufacturing PMI increased to 58.6 from 58.5 in January.
Looking ahead to Tuesday, investors will receive the ISM Non-Manufacturing Index for February, the ADP Employment Change report for February, the final IHS Markit Services PMI for February, the Fed's Beige Book for March, and the weekly MBA Mortgage Applications Index.
- Russell 2000 +15.2% YTD
- Nasdaq Composite +5.4% YTD
- S&P 500 +3.9% YTD
- Dow Jones Industrial Average +3.0% YTD
Market Snapshot
| Dow | 31535.51 | +603.14 | (1.95%) | | Nasdaq | 13588.85 | +396.48 | (3.01%) | | SP 500 | 3901.82 | +90.67 | (2.38%) | | 10-yr Note | -2/32 | 1.433 |
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| | NYSE | Adv 2568 | Dec 654 | Vol 1.1 bln | | Nasdaq | Adv 3187 | Dec 784 | Vol 5.0 bln |
Industry Watch
| Strong: Information Technology, Financials, Energy, Industrials |
| | Weak: Real Estate, Consumer Staples |
Moving the Market
-- March begins with a broad-based rebound rally
-- Encouraging vaccine, stimulus, economic news
-- Treasury market calmed down
-- Technical and sentiment factors
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