Sector Investing

[ReturntoSender]

Stocks rebound after U.S. temporarily eases restrictions on Huawei
21-May-19 16:20 ET
Dow +197.43 at 25877.33, Nasdaq +83.35 at 7785.70, S&P +24.13 at 2864.36

https://www.briefing.com/investor/markets/stock-market-update/2019/5/21/stocks-rebound-after-us-temporarily-eases-restrictions-on-huawei.htm

[BRIEFING.COM] The S&P 500 rebounded 0.9% on Tuesday after the U.S. Department of Commerce granted Huawei a 90-day license to work with U.S. companies so it can service existing networks and mobile devices.

Like the S&P 500, the Dow Jones Industrial Average (+0.8%) and the Russell 2000 (+1.3%) recouped all of their losses from Monday. The tech-sensitive Nasdaq Composite (+1.1%) recouped most of its losses.

The news sent stocks higher out of the gate, as it ran counter to yesterday's reports that several companies began halting business activity with Huawei. Despite caveats that the license is only temporary and that it doesn't permit new business with Huawei, buying was largely broad-based and steady throughout the day. Stocks closed near their session highs.

The trade-sensitive S&P 500 materials (+1.5%), information technology (+1.2%), and industrials (+1.2%) sectors outperformed the broader market. The consumer staples sector (-0.3%) was the lone sector to finish lower.

The Philadelphia Semiconductor Index advanced 2.1%, although it did drop 4.0% on Monday. There remained an understanding that Huawei could still retaliate on the basis that it is still prohibited from conducting new business with U.S. suppliers without a license. Qorvo (QRVO 61.54, +0.27, +0.4%) was the latest company to cut guidance to account for lost business with Huawei.

Earnings reports were retail-heavy on Tuesday. Home Depot (HD 191.45, +0.50, +0.3%) beat earnings estimates and issued upside full-year revenue guidance, but same store sales came up short of estimates. TJX Companies (TJX 53.26, +0.29, +0.6%) and AutoZone (AZO 1032.25, +54.42, +5.6%) advanced following their results, while Kohl's (KSS 55.15, -7.76) fell 12.3% after disappointing investors.

U.S. Treasuries declined modestly, pushing yields slightly higher. The 2-yr yield increased two basis points to 2.24%, and the 10-yr yield increased one basis point to 2.43%. The U.S. Dollar Index increased 0.1% to 98.05. WTI crude declined 0.4% to $63.07/bbl.

Reviewing Tuesday's lone economic report, Existing Home Sales for April:

Existing home sales decreased 0.4% month-over-month in April to a seasonally-adjusted annual rate of 5.19 million (Briefing.com consensus 5.35 million) from an unrevised 5.21 million in March. Total sales were 4.4% lower than the same period a year ago.
The key takeaway from the report is that overall sales activity remained light despite a drop in mortgage rates and a pickup in income, demonstrating that limited inventory and relatively high prices continue to impede existing home sales.

Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the FOMC Minutes from May on Wednesday.

Nasdaq Composite +17.3% YTD
Russell 2000 +14.6% YTD
S&P 500 +14.3% YTD
Dow Jones Industrial Average +10.9% YTD