Sector Investing

[ReturntoSender]

S&P 500 ekes higher as value stocks outperform
10-Sep-19 16:20 ET

Dow +73.92 at 26909.41, Nasdaq -3.28 at 8084.19, S&P +0.96 at 2979.39

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

[BRIEFING.COM] The S&P 500 (+0.03%) eked higher on Tuesday, finishing at its best levels of the day after trading with modest losses the whole day. Tuesday's action saw investors continuing to rotate out of this year's best-performing stocks for those perceived as having more potential value.

The Dow Jones Industrial Average (+0.3%) was lifted by its highest-priced component, Boeing (BA 369.49, +10.71, +3.0%), while the Russell 2000 (+1.2%) outperformed amid big gains in energy stocks. The Nasdaq Composite (-0.04%) finished just below its flat line amid relative weakness in shares of technology companies.

Value-oriented stocks, in this case those that have underperformed amid growth concerns, have come to life this week. Improved sentiment pertaining to growth and trade has contributed to this value trade, which was made most pronounced in the outperformance in the S&P 500 energy sector (+1.3%), SPDR S&P Retail ETF (XRT 43.61, +1.18, +3.0%), and Dow Jones Transportation Average (+1.5%) on Tuesday.

The gains in the transportation space further padded the S&P 500 industrials sector (+1.0%), while Dow Inc. (DOW 46.32, +1.87, +4.2%) boosted the materials sector (+1.0%).

The same underlying sentiment boosting these stocks contributed to the selling in the Treasury market and in the S&P 500 information technology (-0.5%), consumer staples (-0.6%), and real estate (-1.4%) sectors. The tech and real estate sectors have been this year's best-performing sectors, largely due to their respective high-growth and defensive-oriented dispositions.

Treasury yields finished noticeably higher, as the crowded Treasury market continued to see less demand. The 2-yr yield increased nine basis points to 1.66%, and the 10-yr yield increased eight basis points to 1.70%. The U.S. Dollar Index increased 0.1% to 98.38.

In corporate news, Apple (AAPL 216.70, +2.53, +1.2%) held its annual product event where it unveiled its latest iPhone. The $4.99/month pricing for its TV+ streaming service came as a surprise to some and contributed to weakness in Netflix (NFLX 287.99, -6.35, -2.2%).

Wendy's (WEN 19.71, -2.24, -10.2%) was a part of the broader effort to sell momentum stocks, but shares were further pressured by the company cutting its EPS guidance. The lower guidance accounted for its plan to launch a breakfast menu in all locations in 2020.

Reviewing Tuesday's economic data, which included the NFIB Small Business Optimism Index for August and the JOLTS - Job Opening report for July.

The NFIB Small Business Optimism Index for August declined to 103.1 from 104.7 in July. The August reading was its lowest in five months, but the index remains running at elevated levels.
The July Job Openings and Labor Turnover Survey showed that job openings declined to 7.217 million from a revised 7.248 million in June (from 7.348 million).

Looking ahead, investors will receive the Producer Price Index for August, Wholesale Inventories for July, and the weekly MBA Mortgage Applications Index on Wednesday.

Nasdaq Composite +21.8% YTD
S&P 500 +18.9% YTD
Dow Jones Industrial Average +15.4% YTD
Russell 2000 +14.4% YTD