Stocks rise and Treasuries fall in risk-on day
05-Oct-20 16:15 ET
Dow +465.83 at 28138.64, Nasdaq +257.47 at 11332.41, S&P +60.18 at 3408.60
briefing.com
[BRIEFING.COM] The S&P 500 rose 1.8% on Monday in a risk-on trade, as investors received positive news on President Trump's health, stimulus talks, and economic data. The Dow Jones Industrial Average (+1.7%) kept pace with the benchmark index, but the advantage today belonged to the Nasdaq Composite (+2.3%) and Russell 2000 (+2.8%).
Briefly, President Trump said he would leave the hospital tonight after responding well to several coronavirus treatments, including one from Regeneron (REGN 605.08, +40.28, +7.1%); House Speaker Pelosi and Treasury Secretary Mnuchin reportedly made progress on relief talks; and the ISM Non-Manufacturing Index for September increased to 57.8% (Briefing.com consensus 55.6%) from 56.9% in August.
The news cycle fueled a growth mindset that lifted all 11 S&P 500 sectors into positive territory, boosted small-cap stocks, buoyed crude prices ($39.29/bbl, +2.24, +6.1%) by 6%, and steepened the U.S. Treasury yield curve amid selling in longer-dated maturities.
The energy (+2.9%), information technology (+2.3%), and health care (+2.1%) sectors claimed today's leadership positions with gains over 2.0%. The real estate sector underperformed with a 0.6% gain, but the rate-sensitive space had traded lower for most of the session amid the higher Treasury yields.
The 2-yr yield increased one basis point to 0.14%, while the 10-yr yield rose six basis points to 0.76% -- its highest closing level since June. The U.S. Dollar Index fell 0.4% to 93.46.
Another positive factor for trading sentiment was the S&P 500 clearing its 50-day moving average (3365) at the open and never looking back the rest of the session. The benchmark index also topped the 3400 level for the first time since mid-September.
In corporate news, Bristol Myers Squibb (BMY 59.20, +0.48, +0.8%) agreed to acquire MyoKardia (MYOK 220.34, +80.74, +57.8%) for approximately $13 billion, or $225.00/share, in cash.
Reviewing Monday's economic data:
- The ISM Non-Manufacturing Index for September increased to 57.8% (Briefing.com consensus 55.6%) from 56.9% in August. Notably, the September index eclipsed the 57.3% reading registered in February.
- The key takeaway from the report is that it had all the right undertones to promote recovery views: new orders increased, the backlog of orders decreased, supplier deliveries slowed, prices were up, albeit at a slower pace, and employment levels grew following six months of contraction.
- The Markit Services PMI for September increased to 54.6 from 55.0 in August.
Looking ahead, investors will receive the Trade Balance report for August and the JOLTS - Job Openings report for August on Tuesday.
- Nasdaq Composite +26.3% YTD
- S&P 500 +5.5% YTD
- Dow Jones Industrial Average -1.4% YTD
- Russell 2000 -5.2% YTD
Market Snapshot
| Dow | 28138.64 | +465.83 | (1.68%) | | Nasdaq | 11332.41 | +257.47 | (2.32%) | | SP 500 | 3408.60 | +60.18 | (1.80%) | | 10-yr Note | -29/32 | 0.771 |
|
| | NYSE | Adv 2255 | Dec 763 | Vol 849.2 mln | | Nasdaq | Adv 2584 | Dec 889 | Vol 3.5 bln |
Industry Watch
| Strong: Energy, Information Technology, Health Care, Materials |
| | Weak: Real Estate |
Moving the Market
-- Risk-on day following positive news on President Trump's health, stimulus talks, economic data
-- Strength in the energy, technology, and health care sectors
-- WTI crude futures rebound 6%, Treasury curve steepens due to selling on longer-end of curve
|
WTI crude futures rebound 6%
05-Oct-20 15:25 ET
Dow +450.93 at 28123.74, Nasdaq +240.98 at 11315.92, S&P +57.82 at 3406.24
[BRIEFING.COM] The S&P 500 is trading at fresh session highs with a 1.7% gain and above the 3400 level.
One last look at the S&P 500 sectors shows all 11 groups trading higher, with real estate (+0.4%) emerging into positive territory this afternoon. The energy (+2.4%), materials (+2.2%), information technology (+2.1%), and health care (+2.1%) sectors are up more than 2.0%.
Energy stocks are drawing additional support from the sharp increase in oil prices. WTI crude futures settled sharply higher by 6.1%, or $2.24, to $39.29/bbl. |
