Another day, another record high as mega-caps power rally
26-Aug-20 16:15 ET
Dow +83.48 at 28331.92, Nasdaq +198.59 at 11665.06, S&P +35.11 at 3478.73
briefing.com
[BRIEFING.COM] The S&P 500 (+1.0%) and Nasdaq Composite (+1.7%) rallied to fresh record highs on Wednesday, propelled higher by some eye-popping gains in the mega-cap stocks. The Dow Jones Industrial Average increased just 0.3%, while the Russell 2000 was left in the dust with a 0.7% decline.
Highlighting a few of the moves: Salesforce (CRM 272.32, +56.27, +26.0%) surged 26% following its earnings report, Facebook (FB 303.91, +23.09, +8.2%) rose 8% on no news, and Netflix (NFLX 547.53, +56.95, +11.6%) rose 11% on no news. Apple (AAPL 506.09, +6.79, +1.4%) and Tesla (TSLA 2153.17, +129.83, +6.4%) were fueled by a pair of Street-high price-target increases.
Consequently, today's leadership came from the S&P 500 communication services (+3.7%), information technology (+2.1%), and consumer discretionary (+1.5%) sectors, which are home to many of the mega-caps. In the afternoon, the gains broadened out to the materials (+1.0%), industrials (+0.1%), and consumer staples (+0.1%) sectors.
Notably, the market internals weren't as bullish. Declining issues outnumbered advancing issues at the NYSE and Nasdaq by a comfortable margin. The biggest laggards were found within the energy (-2.2%), utilities (-1.2%), and real estate (-0.7%) sectors.
In other developments, durable goods orders increased 11.2% m/m in July (Briefing.com consensus +3.9%), and Moderna (MRNA 70.50, +4.25, +6.4%) said its COVID-19 vaccine generated a promising immune response in ten elderly patients.
For some perspective on today's record-setting performance, the S&P 500 finished the day up 58.7% from its March 23 low, up 7.7% for the year, and 13.0% above its 200-day moving average (3079). The latter raises the risk for a technical correction, although the momentum in the market can go on for longer than expected.
U.S. Treasuries finished the day little changed. The 2-yr yield decreased one basis point to 0.15%, and the 10-yr yield increased one basis point to 0.69%. The U.S. Dollar Index declined 0.1% to 92.91. WTI crude futures increased by 0.1% to $43.39/bbl.
Reviewing Wednesday's economic data:
- New orders for durable goods increased 11.2% m/m in July (Briefing.com consensus +3.9%) from an upwardly revised 7.7% (from 7.6%) in June. Excluding transportation, new orders jumped 2.4% m/m (Briefing.com consensus +1.8%) following an upwardly revised 4.0% increase (from 3.6%) in June.
- The key takeaway from the report is that increased orders were seen across the manufacturing complex (other than nondefense aircraft and parts), underscoring a recovery-minded disposition in the wake of the COVID shutdown period.
- The weekly MBA Mortgage Applications Index declined 6.5% following a 3.3% decrease in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the second estimate for Q2 GDP, and Pending Home Sales for July on Thursday.
- Nasdaq Composite +30.0% YTD
- S&P 500 +7.7% YTD
- Dow Jones Industrial Average -0.7% YTD
- Russell 2000 -6.5% YTD
Market Snapshot
| Dow | 28331.92 | +83.48 | (0.30%) | | Nasdaq | 11665.06 | +198.59 | (1.73%) | | SP 500 | 3478.73 | +35.11 | (1.02%) | | 10-yr Note | -1/32 | 0.695 |
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| | NYSE | Adv 1158 | Dec 1809 | Vol 745.0 mln | | Nasdaq | Adv 1432 | Dec 1910 | Vol 3.4 bln |
Industry Watch
| Strong: Information Technology, Communication Services, Consumer Discretionary, Materials |
| | Weak: Energy, Utilities, Real Estate, Financials |
Moving the Market
-- S&P 500 and Nasdaq closed at fresh record highs on back of continued mega-cap leadership
-- Upbeat earnings reports, economic data
-- Declining issues outpaced advancing issues at NYSE and Nasdaq by a comfortable margin
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