Market Snapshot
briefing.com
| Dow | 36799.65 | +214.59 | (0.59%) | | Nasdaq | 15622.71 | -210.08 | (-1.33%) | | SP 500 | 4793.54 | -3.02 | (-0.06%) | | 10-yr Note | -2/32 | 1.648 |
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| | NYSE | Adv 1670 | Dec 1614 | Vol 950.3 mln | | Nasdaq | Adv 1857 | Dec 2637 | Vol 5.0 bln |
Industry Watch
| Strong: Financials, Energy, Industrials, Materials |
| | Weak: Information Technology, Health Care, Consumer Discretionary |
Moving the Market
-- Dow sets intraday and closing record highs amid strength in the value/cyclical stocks
-- Growth stocks fall amid continued rise in long-term rates
-- December ISM Manufacturing Index showed ease in inflation pressures
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Value stocks propel Dow to record highs
04-Jan-22 16:20 ET
Dow +214.59 at 36799.65, Nasdaq -210.08 at 15622.71, S&P -3.02 at 4793.54
[BRIEFING.COM] The S&P 500 declined 0.1% on Tuesday in a mixed session, which was better represented by the sharp divergence between the Dow Jones Industrial Average (+0.6%) and Nasdaq Composite (-1.3%). Both the S&P 500 and Dow set intraday record highs while the Dow also set a closing record high. The Russell 2000 declined 0.2%.
Today's session was reminiscent of the classic reopening trade, except that it's 2022 and daily COVID-19 cases in the U.S. topped one million yesterday. Value/cyclical stocks outperformed at the expense of growth stocks, the Treasury yield curve steepened, and WTI crude futures settled at $77.00 per barrel (+$1.00, +1.3%).
More specifically, the S&P 500 energy (+3.5%), financials (+2.6%), industrials (+2.0%), and materials (+1.3%) sectors rose between 1-4%. The 10-yr yield increased four basis points to 1.67% while the 2-yr yield decreased two basis points to 0.76%. The U.S. Dollar Index increased 0.1% to 96.28.
Notably, the 10-yr yield has now risen 16 basis points start the year, increasing the probability that 2022 will be marked by a higher-interest rate environment, as forecasted by many analysts on Wall Street. This view weighed on the highly-valued growth stocks, albeit in a delayed reaction since the Nasdaq was up 0.1% in early action.
The information technology (-1.1%), health care (-1.4%), and consumer discretionary (-0.7%) sectors struggled amid weakness in the growth stocks. The Vanguard Mega Cap Growth ETF (MGK 260.20, -3.27) fell 1.2%. The iShares Biotechnology ETF (IBB 148.29, -4.08) fell 2.7%. The ARK Innovation ETF (ARKK 92.69, -4.30) fell 4.4%.
Selling interest in the growth stocks accelerated soon after the release of the December ISM Manufacturing Index at 10:00 a.m. ET. While the index decelerated more than expected to 58.7% (Briefing.com consensus 60.3%) from 61.1% in November, it still denoted an expanding manufacturing sector.
More encouragingly, the Prices Index in the ISM report showed a noticeable ease in inflation pressures. The Omicron variant could pose risks this month, but the inference from today (and prior weeks) is that market sees the economic impact from the variant as short-term.
Growth stocks eventually pared losses in the afternoon, helping the market end the Santa Claus rally period on a better note.
Reviewing Tuesday's economic data:
- The December ISM Manufacturing Index checked in at 58.7% (Briefing.com consensus 60.3%) versus 61.1% in November. A number above 50.0% is indicative of expansion. December marked the 19th straight month of expansion for the manufacturing sector, albeit at a slower pace.
- The key takeaway from the report is the recognition that price pressures softened some, presumably due to improved supply chain conditions; however, supply concerns (and inflation worries) aren't going to fade away knowing that the Omicron variant is driving global staffing challenges.
- Job openings decreased to 10.562 million in November from a revised 11.091 million (from 11.033 million) in October.
Looking ahead, investors will receive the ADP Employment Change report for December, the FOMC Minutes from the December meeting, the preliminary IHS Markit Services PMI for December, and the weekly MBA Mortgage Applications Index on Wednesday.
- Dow Jones Industrial Average +1.3% YTD
- Russell 2000 +1.1% YTD
- S&P 500 +0.6% YTD
- Nasdaq Composite -0.1% YTD
Crude futures settle at $77 per barrel amid expected OPEC+ decision
04-Jan-22 15:30 ET
Dow +280.04 at 36865.10, Nasdaq -203.38 at 15629.41, S&P +2.51 at 4799.07
[BRIEFING.COM] The S&P 500 is trading at its flat line and is vying for a record close despite the weakness from the mega-caps.
One last look at the sectors shows energy (+3.5%), financials (+2.7%), industrials (+2.0%), and materials (+1.4%) leading the effort with nice gains, while the information technology (-1.1%), health care (-1.2%), and consumer discretionary (-0.6%) sectors underperform in negative territory.
WTI crude futures settled higher by 1.3%, or $1.00, to $77.00 per barrel. On a related note, OPEC+ reaffirmed an agreement to increase output by 400,000 barrels/day in February, which was expected. |
