Financial stocks carry S&P 500 to new highs
27-Aug-20 16:15 ET
Dow +160.35 at 28492.27, Nasdaq -39.72 at 11625.34, S&P +5.82 at 3484.55
briefing.com
[BRIEFING.COM] The S&P 500 increased 0.2% on Thursday, closing at another record high and touching the 3500 level for the first time in the process. The Dow Jones Industrial Average (+0.6%) and Russell 2000 (+0.3%) performed slightly better, while the Nasdaq Composite declined 0.3% after setting an all-time high earlier in the session.
Financial stocks were among today's biggest winners, benefiting from some curve-steepening activity after Fed Chair Powell outlined a shift towards an average inflation target. Under the new framework, the Fed would allow PCE inflation to run moderately beyond 2.0% over time to make up for years when it ran below 2.0%.
From a sector perspective, the S&P 500 financials sector finished atop the standings with a 1.7% gain, followed by real estate (+1.4%), health care (+0.8%), and consumer staples (+0.6%). The communication services (-1.3%), consumer discretionary (-0.7%), and materials (-0.2%) sectors were the lone holdouts.
Other positive factors today included reports that Microsoft (MSFT 226.58, +5.43, +2.5%) and Walmart (WMT 136.63, +5.93, +4.5%) are teaming up to possibly acquire TikTok US, and Abbott Labs (ABT 111.29, +8.10, +7.9%) receiving emergency use authorization from the FDA for its $5.00, 15-minute COVID-19 antigen test.
Mega-cap growth stocks had a relatively weak outing today after an incredibly strong performance yesterday. Microsoft was an exception, of course, and so was Tesla (TSLA 2238.75, +85.58, +4.0%).
As an aside, Senate Majority Leader McConnell (R-KY) reportedly said stimulus talks remained at a stalemate, which may have been a contributing factor in the market's brief dip into negative territory around 1:00 p.m. ET. The market, however, swiftly rebounded into positive territory.
Recapping the moves in the Treasury market, the 2-yr yield finished flat at 0.16%, while the 10-yr yield increased six basis points to 0.75% as investors sold longer-dated bonds following Fed Chair Powell's speech. The U.S. Dollar Index was little changed at 93.03. WTI crude futures declined 0.8%, or $0.36, to $43.03/bbl.
Reviewing Thursday's economic data:
- Initial jobless claims for the week ending August 22 were roughly in-line with expectations, decreasing by 98,000 to 1.006 million (Briefing.com consensus 1.000 million). Continuing claims for the week ending August 15 decreased by 223,000 to 14.535 million.
- The key takeaway from the report is that the labor market, while recovering, is still fractured in a big way that is not conducive for strong and sustained economic growth.
- The second estimate for Q2 GDP showed output decreased at an annualized rate of 31.7% (Briefing.com consensus -32.9%) versus the advance estimate of -32.9%. The GDP price index was down 2.0% (Briefing.com consensus -1.8%) versus the advance estimate of -1.8%.
- The key takeaway from the report is that the upward revision doesn't change the fact that the COVID crisis triggered the biggest downturn for the U.S. economy on record.
Looking ahead, investors will receive the Personal Income and Spending report for July, the final Univ. of Michigan Index of Consumer Sentiment for August, and Wholesale Inventories for July on Friday.
- Nasdaq Composite +29.6% YTD
- S&P 500 +7.9% YTD
- Dow Jones Industrial Average -0.2% YTD
- Russell 2000 -6.2% YTD
Market Snapshot
| Dow | 28492.27 | +160.35 | (0.57%) | | Nasdaq | 11625.34 | -39.72 | (-0.34%) | | SP 500 | 3484.55 | +5.82 | (0.17%) | | 10-yr Note | -27/32 | 0.746 |
|
| | NYSE | Adv 1648 | Dec 1289 | Vol 777.9 mln | | Nasdaq | Adv 1578 | Dec 1760 | Vol 3.5 bln |
Industry Watch
| Strong: Financials, Real Estate, Consumer Staples |
| | Weak: Communication Services, Consumer Discretionary, Materials |
Moving the Market
-- S&P 500 closes at another record high
-- Fed Chair Powell outlined new policy framework for an average inflation target
-- Treasury curve steepens, financial stocks outperformed
-- Mega-cap growth stocks generally underperformed
|
WTI crude settles lower
27-Aug-20 15:25 ET
Dow +282.90 at 28614.82, Nasdaq +14.14 at 11679.20, S&P +19.02 at 3497.75
[BRIEFING.COM] The S&P 500 is back near session highs with a 0.6% gain. The Russell 2000 is up 0.5%.
One last glance at the S&P 500 sectors shows nine trading higher and two trading lower. Financials (+2.1%), real estate (+1.6%), and health care (+1.2%) are the only groups trading above 1.0%, while the communication services (-0.9%) and consumer discretionary (-0.3%) sectors trade lower.
WTI crude futures settled lower by 0.8%, or $0.36, to $43.03/bbl. |
