From Briefing.com: 4:15 pm Closing Market Summary: Bulls Dominate on Tuesday (:WRAPX) :
Last Tuesday, the S&P 500 posted its worst day of 2017 in a performance that some believed to be the end of the stock market's post-election party. However, the cash market held its ground in the days that followed and the S&P 500 resisted yesterday's intraday dip below its 50-day moving average (2333), giving investors renewed confidence that there still may be some room to run. That hypothesis was validated today as the S&P 500 advanced 0.7%, benefiting from a steady rally throughout the day. The Dow and the Nasdaq also settled with solid gains, adding 0.7% and 0.6%, respectively.
The financial sector (+1.4%) took the reigns in today's session, recouping a sizable portion of last Tuesday's plunge. The group has come to symbolize the post-election rally after leading the charge with a 26.0% gain from November 8 to January 3. Financials' cyclical peers followed suit with the industrials (+1.1%) materials (+1.1%), and energy (+1.3%) sectors outpacing the broader market.
To be fair, the energy sector's performance was more of a response to crude oil's advance rather than the financial sector's leadership. The energy component settled 1.4% higher at $48.37/bbl after an armed group of individuals shut down pipelines in Libya due to a wage dispute.
On the countercyclical side, the health care sector (+0.1%) struggled after House Speaker Paul Ryan and Majority Leader Kevin McCarthy expressed the belief that it's still not too late to repeal and replace the Affordable Care Act. White House Press Secretary Sean Spicer followed up those comments by saying that discussions on health care reform are taking place, but there is no active planning at the present time.
Within the health care space, biotech stocks were hit the hardest as President Trump's promise to reduce drug prices resurfaced alongside health care reform. The iShares Nasdaq Biotechnology ETF (IBB 292.01, -1.13) settled lower by 0.4%.
The remaining defensive sectors also underperformed, with the rate-sensitive utilities group (+0.1%) showing relative weakness after selling pressure in the Treasury market left yields modestly higher; the benchmark 10-yr yield finished four basis points higher at 2.42%.
In addition to Treasury yields, the U.S. Dollar Index (99.53, +0.50) also closed in the green, rising 0.5%, after Fed Vice Chair Stanley Fischer stated that he believes a forecast of two more rate hikes in 2017 is appropriate.
Investors received several economic reports on Tuesday, including March Consumer Confidence, February Advance International Trade in Goods, and January S&P Case-Shiller Home Price Index:
The consumer confidence reading for March rose to 125.6 from the prior month's revised reading of 116.1 (from 114.8). The Briefing.com consensus expected the survey to hit 113.3.
The key takeaway from this report is that consumers were emboldened by a positive view of current business and labor market conditions. There was an improvement in the short-term outlook for business, jobs, and personal income prospects, and more upside is expected on these fronts. Keep in mind that this survey was taken before the failure of health care reform.
The Advance report for International Trade in Goods for February showed a deficit of $64.8 billion (Briefing.com consensus -$66.1 billion), up from a revised deficit of $68.8 billion for January (from $69.2 billion). The Advance report for February Wholesale Inventories increased 0.4% (Briefing.com consensus 0.2%). The prior month's reading was revised to -0.2% from -0.1%.
The January Case-Shiller 20-city Index hit 5.7% to follow last month's revised 5.5% increase (from 5.6%). The Briefing.com consensus expected a reading of 5.6%.
On Wednesday, investors will receive the weekly MBA Mortgage Applications Index at 7:00 ET and February Pending Home Sales (Briefing.com consensus 2.4%) at 10:00 ET.
Nasdaq Composite +9.1% YTD
S&P 500 +5.4% YTD
Dow Jones Industrial Average +4.8% YTD
Russell 2000 +0.7% YTD
A week ago today, the broader market was in some dire straits as losses of better than -1.0% across the board gave the three major US averages their worst session in months. Fast forward to a week later, and today the broader market seems to be none the wiser as gains of better than +0.5% across the board have cut a significant chunk of last week's losses. To that end, the Dow Jones Industrial Average was the best performer today, adding 150.52 points (+0.73%) to 20701.50. The S&P 500 also fared well, gaining 16.98 points on Tuesday (+0.73%) to 2358.57, while the Nasdaq Composite rounded out the trio up 34.77 points (+0.60%) to 5875.14 for impressive gains in its own right.
Today's economic date included the consumer confidence reading for March which rose to 125.6 from the prior month's revised reading of 116.1 (from 114.8). Additionally, the Advance report for International Trade in Goods for February showed a deficit of $64.8 billion, up from a revised deficit of $68.8 billion for January (from $69.2 billion). The Advance report for February Wholesale Inventories increased 0.4% while the prior month's reading was revised to -0.2% from -0.1%. Lastly, the January Case-Shiller 20-city Index hit 5.7% to follow last month's revised 5.5% increase (from 5.6%).
After yesterday's flat session, the Technology (XLK 53.22, +0.38 +0.72%) space once again sprang into positive territory. Component Red Hat (RHT 86.48, +4.28 +5.21%) was the best performer today behind the company's Q4 report and guidance. Today's action in the 11 S&P sectors was decidedly positive led by the Energy space XLE +1.42%, XLF +1.36%, XLB +1.16%, XLI +1.06%, XLY +0.76%, XLRE +0.58%, XLP +0.18%, XLV +0.07%, IYZ -0.06%, XLU -0.08%.
In the S&P 500 Information Technology (903.95, +6.42 +0.72%) space, trading finished just under highs. Components XRX +2.80%, WDC +2.53%, AAPL +2.07%, TSS +1.76%, ACN +1.64%, ATVI +1.55%, CSRA +1.51%, FLIR +1.31%, TDC +1.28%, HPE +1.28% were among the best performers in the space today.
Other notable news items among sector components:
Ericsson (ERIC 6.45, -0.24 -3.59%) presented a new business strategy to improve profitability. The company sees a Q1 write down of assets with an estimated impact on operating income of SEK3-4 billion.
Accenture (ACN 121.35, +1.96 +1.64%) received a five-year $232 million contract to help the U.S. Marshals Service implement its Mission Modernization Program.
According to The Register, Oracle (ORCL 44.69, -0.15 -0.33%) has hired specialists to explore a potential acquisition of Accenture (ACN).
According to The Information, Cisco (CSCO 34.02, +0.03 +0.09%) might split its networking software and hardware units.
Facebook (FB 141.76, +1.44 +1.03%) launched new features in competition to Snap's (SNAP 22.21, -1.62 -6.80%) Snapchat - camera effects and stories.
In reaction to quarterly results:
FactSet (FDS 164.57, -9.98 -5.72%) reported better than expected Q2 EPS of $1.81 on revenues which rose 4.5% compared to last year to $294.4 million. The company also guided Q3 EPS in-line at $1.80-1.86 and revenues above market expectations at $301-307 million.
Red Hat (RHT) reported in-line Q4 EPS of $0.61 on better than expected revenues of $628.8 million. The company also guided Q1 EPS below market expectations at $0.52-0.53 on better than expected revenues of $643-650 million. For FY18, the company sees EPS and revenues ahead of market expectations at $2.60-2.64 and $2.72-2.76 billion, respectively.
Companies scheduled to report quarterly results tonight/tomorrow morning: VRNT/PAYX, SCWX
Analyst actions:
PCTY and IMASY were upgraded to Outperform from Sector Perform ratings at RBC Capital Mkts;
FIS was downgraded to Neutral from Buy at Goldman,
KVHI was downgraded to Outperform from Strong Buy at Raymond James;
SNAP was initiated with a Hold at Loop Capital,
ZBRA was initiated with a Buy at Needham,
DXC was initiated with a Buy at Goldman,
FIS was initiated with an Outperform at William Blair
