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S&P 500 closed unchanged; energy, financials outperformed
09-Sep-19 16:25 ET
Dow +38.05 at 26835.49, Nasdaq -15.64 at 8087.47, S&P -0.28 at 2978.43

https://www.briefing.com/stock-market-update

[BRIEFING.COM] The large-cap U.S. indices finished little changed on Monday, with gains in energy and financial stocks helping offset the losses in the technology and health care stocks. The S&P 500 (-0.01%), Nasdaq Composite (-0.2%), and Dow Jones Industrial Average (+0.1%) finished near their flat lines.

The small-cap Russell 2000 (+1.3%), which is home to many energy and financial stocks, outperformed the broader market.

The market entered today on the heels of a two-week rally, with some investors beginning to feel less concerned about growth prospects and trade relations with China. For instance, data has shown the U.S. consumer to be resilient in the face of trade tensions, which could see a reprieve with trade talks coming up next month.

This positive sentiment was manifested in the higher oil prices ($57.87/bbl, +$1.42, +2.5%) and the selling in the Treasury market on Monday. In turn, the S&P 500 financials (+1.5%) and energy (+1.9%) sectors were today's leaders, which were further boosted by their perceived value-oriented nature, as opposed to the crowded positioning in the information technology sector (-0.7%).

The 2-yr yield increased five basis points to 1.57%, and the 10-yr yield increased seven basis points to 1.62%. The U.S. Dollar Index declined 0.1% to 98.32.

The Dow Jones Transportation Average (+2.0%), which is a trade-sensitive group and is often viewed as a proxy for economic growth, also outperformed. The defensive-oriented real estate (-0.9%), health care (-0.9%), and utilities (-0.6%) sectors joined the tech sector as today's laggards.

Separately, Saudi Arabia replaced its oil minister with a member of the royal family, which traders believed could portend favorable policy for oil prices. A less appreciated factor contributing to the outperformance in the energy sector was the relatively higher dividend yields that many energy companies provide yield-hunting investors.

In corporate news, activist shareholder Elliot Management disclosed a $3.2 billion stake in AT&T (T 336.79, +0.54, +1.5%), sharing a plan with the company it thinks could boost the stock to $60 by the end of 2021. Much of the initial enthusiasm waned throughout the session, leaving shares of AT&T near their session lows.

Monday's economic data was limited to the Consumer Credit Report for July:

Consumer credit increased by $23.3 bln in July (Briefing.com consensus $18.2 bln) after increasing a downwardly revised $13.8 bln (from $14.6 bln) in June. That is the largest expansion since July 2018.
The key takeaway from the report is the recognition that revolving credit expanded at its fastest pace since November 2017. That could mean one of two things: (1) consumers are using revolving credit more because they lack the cash to cover spending on basic needs or (2) consumers are using revolving credit more because they feel confident about repayment capabilities due to feelings of job security. Only future economic data will tell the real tale, but in the context of a U.S. growth outlook, the expansion in consumer credit in July is apt to be taken at face value as an an encouraging sign.

Looking ahead, investors will receive the NFIB Small Business Optimism Index for August and the JOLTS - Job Opening report for July on Tuesday.

Nasdaq Composite +21.9% YTD
S&P 500 +18.8% YTD
Dow Jones Industrial Average +15.0% YTD
Russell 2000 +13.0% YTD