Sector Investing

[ReturntoSender]

Nasdaq and S&P 500 Snap Three-Day Streak
25-Jul-19 16:15 ET
Dow -128.99 at 27140.98, Nasdaq -82.96 at 8238.54, S&P -15.89 at 3003.67

https://www.briefing.com/investor/markets/stock-market-update/2019/7/25/nasdaq-and-s-and-p-500-snap-threeday-streak.htm

[BRIEFING.COM] The stock market ended Thursday near session lows after spending the day in negative territory. The Dow (-0.5%) and S&P 500 (-0.5%) posted comparable losses while the Nasdaq (-1.0%) underperformed throughout the session.

Quarterly earnings were in focus today, and while the market received a fair share of above-consensus results, individual names did not respond nearly as well. For instance, Facebook (FB 200.71, -3.95, -1.9%) beat earnings and revenue expectations, but cautioned that its revenue growth will slow. Similarly, Xilinx (XLNX 127.59, -4.55, -3.4%) beat quarterly estimates, but issued cautious guidance. The stock was among the weakest performers in the PHLX Semiconductor Index (-1.7%), which was also pressured by a defensive outlook offered overnight by South Korean manufacturer of RAM and flash memory SK Hynix. The PHLX Semiconductor Index trimmed this week's gain to 4.6% after setting a fresh record high yesterday.

In other "earnings" of note, Tesla (TSLA 228.82, -36.06, -13.6%) slid toward its July low after reporting a loss that was three times larger than what analysts had expected. The company also announced that CTO JB Straubel is leaving his role but will continue serving in an advisory capacity.

The top-weighted technology sector (-0.8%) was among today's weakest groups while most of the remaining cyclical sectors recorded slimmer losses. The energy sector (-1.2%) was an exception, finishing at the bottom of the leaderboard, even though crude oil ticked up 0.2% to $56.03/bbl.

Elsewhere, industrials (-0.2%) and consumer staples (unch) held slim gains in early trade, but could not stay above their flat lines through the close. Conglomerate 3M (MMM 178.13, -1.29, -0.7%) started with a sharp gain after beating Q2 expectations, but the stock faded from its early high to end near its session low.

On the international front, the European Central Bank released a dovish policy statement, and ECB President Mario Draghi made it clear that the central bank intends to take steps to increase inflation in the eurozone. However, the ECB President did not announce any new measures today.

Treasuries started the day on their highs, but backtracked after the release of a stronger than expected Durable Orders report for June. Today's $32 bln 7-yr Treasury note auction was received with soft demand, representing the third consecutive weak note auction. The 10-yr yield rose two basis points to 2.07%.

Reviewing today's economic data:

New orders for durable goods jumped 2.0% m/m in June (Briefing.com consensus 1.0%) following a downwardly revised 2.3% decline (from -1.3%) in May. Excluding transportation, new orders rose a healthy 1.2% (Briefing.com consensus 0.3%) following an upwardly revised 0.5% increase (from 0.3%) in May.
The key takeaway from the report is that it revealed a welcome pickup in business spending, which is embedded in the 1.9% increase in nondefense capital goods orders, excluding aircraft. Shipments of those goods were also up 0.6%, which will be a positive input for Q2 GDP forecasts.
Initial claims for the week ending July 20 declined by 10,000 to 206,000 (Briefing.com consensus 215,000) while continuing claims for the week ending July 13 fell by 13,000 to 1.676 million.
The key takeaway from the report is that there was nothing new to take away from it: initial claims remain near historically low levels in a reflection of a tight labor market.
The advance June goods trade deficit totaled $74.20 bln (prior deficit of $75.00 bln).
Advance Retail Inventories decreased 0.1% in June after increasing 0.3% in May.
Advance Wholesale Inventories increased 0.2% in June after increasing by 0.4% in May.

Tomorrow's data will be limited to the 8:30 ET release of advance Q2 GDP (Briefing.com consensus 1.8%; prior 3.1%) and Q2 GDP Deflator (Briefing.com consensus 1.8%; prior 0.6%).

Nasdaq Composite +24.2% YTD
S&P 500 +19.8% YTD
Dow Jones Industrial Average +16.4% YTD
Russell 2000 +15.8% YTD