Reopening trade lifts market higher on vaccine news
15-Jul-20 16:15 ET
Dow +227.51 at 26870.10, Nasdaq +61.91 at 10550.58, S&P +29.04 at 3226.56
briefing.com
[BRIEFING.COM] The S&P 500 gained 0.9% on Wednesday in a choppy trading session following another positive vaccine update. The Dow Jones Industrial Average increased 0.9%, and the Nasdaq Composite increased 0.6%. The Russell 2000 outperformed with a 3.5% gain amid strength in small-cap cyclical stocks.
A reopening trade in which economically-sensitive stocks outperform was catalyzed by news that Moderna's (MRNA 80.22, +5.18, +6.9%) COVID-19 candidate elicited neutralizing antibodies in all 45 participants in a Phase 1 study. MRNA shares closed higher by 7%, although they were up as much as 18% intraday.
Other measures of support included impressive quarterly results from Goldman Sachs (GS 216.90, +2.89, +1.4%), the Fed's July Beige Book observing an increase in consumer spending across all districts, industrial production increasing 5.4% m/m in June (Briefing.com consensus 4.6%), and the Empire State Manufacturing Survey for July jumping to 17.2 (Briefing.com consensus 5.8) from -0.2 in June.
From a sector standpoint, the S&P 500 industrials (+2.6%), energy (+2.0%), financials (+1.9%), and materials (+1.7%) sectors benefited the most from this reopening trade, while the defensive-oriented utilities (-0.4%) and consumer staples (unch) sectors underperformed.
It was also a rotational trade, as cyclical, value, and small-cap stocks outperformed at the expense of mega-cap technology stocks like Amazon (AMZN 3008.87, -75.13, -2.4%). The underperformance of these widely-held names briefly cut the S&P 500's intraday gain to just 0.1%, but a buy-the-dip trade ultimately prevailed.
Some of that intraday selling was also attributed to pestering diplomatic tensions between the U.S. and China and an inability of the S&P 500 to stay above its June 8 closing level (3232.39). UnitedHealth (UNH 304.07, -4.45, -1.4%) was an additional drag following its mixed earnings report.
U.S. Treasuries finished mixed and little changed. The 2-yr yield declined one basis point to 0.14%, while the 10-yr yield increased two basis points to 0.63%. The U.S. Dollar Index declined 0.2% to 96.06. WTI crude increased 2.2%, or $0.89, to $41.13/bbl.
Reviewing Wednesday's economic data:
- Total industrial production increased 5.4% m/m in June (Briefing.com consensus 4.6%) following an unrevised 1.4% increase in May. The capacity utilization rate improved to 68.6% (Briefing.com consensus 68.3%) from an upwardly revised 65.1% (from 64.8%) in May.
- The key takeaway from the report was the stark disclosure that the index fell 42.6% at an annual rate for the second quarter as a whole, which was the worst downturn since the industrial retrenchment after World War II.
- The Empire State Manufacturing Survey for July jumped to 17.2 (Briefing.com consensus 5.8) from -0.2 in June. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
- Import prices increased 1.4% in June, and prices, excluding oil, increased 0.3%. Export prices increased 1.4% in June, and prices, excluding agriculture, also increased 1.4%.
- The weekly MBA Mortgage Applications Index increased 5.1% following a 2.2% increase in the prior week.
Looking ahead to Thursday's economic calendar, investors will receive the weekly Initial and Continuing Claims report, Retail Sales for June, the Philadelphia Fed Index for July, the NAHB Housing Market Index for July, Business Inventories for May, and Net Long-Term TIC Flows for May.
- Nasdaq Composite +17.6% YTD
- S&P 500 -0.1% YTD
- Dow Jones Industrial Average -5.9% YTD
- Russell 2000 -11.4% YTD
Market Snapshot
| Dow | 26870.10 | +227.51 | (0.85%) | | Nasdaq | 10550.58 | +61.91 | (0.59%) | | SP 500 | 3226.56 | +29.04 | (0.91%) | | 10-yr Note | -1/32 | 0.636 |
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| | NYSE | Adv 2473 | Dec 457 | Vol 950.9 mln | | Nasdaq | Adv 2556 | Dec 606 | Vol 4.5 bln |
Industry Watch
| Strong: Energy, Industrials, Financials, Materials |
| | Weak: Utilities, Consumer Staples |
Moving the Market
-- Stock market gains on familiar reopening trade, catalyzed by a positive vaccine update from Moderna (MRNA)
-- Encouraging bank earnings and economic data
-- Mega-cap technology stocks undeperformed
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WTI crude gains 2% in reopening trade
15-Jul-20 15:30 ET
Dow +127.05 at 26769.64, Nasdaq +28.23 at 10516.90, S&P +20.26 at 3217.78
[BRIEFING.COM] The S&P 500 continues to drift higher by 0.7%. The Russell 2000 stays ahead with a strong 3.5% gain.
One last look at the S&P 500 sectors shows industrials (+2.4%), financials (+1.6%), energy (+1.4%), and materials (+1.3%) in the lead as money continues to flow into cyclical stocks, while the consumer staples (-0.1%) and utilities (-0.3%) sectors trade lower.
WTI crude futures settled higher by $0.89 (+2.2%) to $41.13/bbl. |
