Sector Investing

[ReturntoSender]

Wall Street closes little changed after Phase One deal reached
13-Dec-19 16:15 ET
Dow +3.33 at 28135.29, Nasdaq +17.56 at 8734.89, S&P +0.23 at 3168.80

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

[BRIEFING.COM] The stock market closed little changed on Friday after the U.S. and China finally reached a Phase One trade deal that prevented the Dec. 15 tariffs from taking effect. The S&P 500 (+0.01%) and Nasdaq Composite (+0.2%) eked out closing records. The Dow Jones Industrial Average finished flat, while the Russell 2000 declined 0.4%.

Specifically, the tariff rate on $250 billion of Chinese imports will remain at 25%, the tariff rate on $120 billion of Chinese imports will be cut to 7.5% from 15%, and China will try to purchase $40-50 billion in U.S. farm goods, although this latter part has yet to be solidified. A deal will reportedly be signed in early January.

President Trump said Phase Two discussions will begin immediately, which should focus on issues pertaining to forced technology transfers and IP rights, according to NEC Director Kudlow. The market's muted reaction to the partial deal was presumably attributed to it already being priced into the market's record run. Some skepticism about the limited details and China's commitment lingered.

The S&P 500 energy (-0.9%), materials (-0.8%), and financials (-0.5%) sectors did some pulling back, while the utilities (+0.8%) and information technology (+0.6%) sectors outperformed. Shares of Apple (AAPL 275.15, +3.69, +1.4%) climbed further into record territory.

The Philadelphia Semiconductor Index (-0.6%) was pressured by a negative reaction to Broadcom's (AVGO 315.42, -12.38, -3.8%) earnings report. Oracle (ORCL 54.51, -1.96, -3.5%) and Costco (COST 291.87, -5.47, -1.8%) also had disappointing earnings-based reactions, while Adobe (ADBE 317.94, +11.98, +3.9%) outperformed following its results.

U.S. Treasuries reversed the bulk of yesterday's sell-off, driving yields noticeably lower across the curve. The 2-yr yield fell seven basis points to 1.60%, and the 10-yr yield fell eight basis points to 1.82%. The U.S. Dollar Index declined 0.2% to 97.20. WTI crude rose 1.6%, or $0.93, to $60.11/bbl.

Separately, UK Prime Minister Boris Johnson's Conservative Party easily won the general election, paving the way for a Brexit by the end of January. UK's FTSE rose 1.1%, and the British pound rallied 1.4% against the dollar to 1.3339.

Reviewing Friday's economic data, which included the Retail Sales report for November, Export and Import Prices for November, and Business Inventories for October:

Total retail sales increased 0.2% m/m in November (Briefing.com consensus 0.5%) following an upwardly revised 0.4% increase (from 0.3%) in October. Excluding autos, retail sales rose 0.1% (Briefing.com consensus 0.4%) after an upwardly revised 0.3% increase (from 0.2%) in October.
The report denotes softer levels of discretionary spending activity in November, but the key takeaway is that there was still growth, which is consistent with the market's view that the U.S. consumer has the fundamental backing to keep spending.
Import prices for November were up 0.2%. Excluding fuel, they were down 0.1%, marking the fourth straight decline. Export prices were up 0.2%. Excluding agricultural products, they were flat.
The key takeaway from the report is that it points to an indolent inflation backdrop.
Total business inventories increased 0.2% month-over-month in October (Briefing.com consensus +0.2%) after a downwardly revised 0.1% decline (from 0.0%) in September. Total business sales were down 0.1% following a downwardly revised 0.4% decline (from -0.2%) in September.

Looking ahead, investors will receive the Empire State Manufacturing Survey for December, the NAHB Housing Market Index for December, and Net Long-Term TIC Flows on Monday.

Nasdaq Composite +31.6% YTD
S&P 500 +26.4% YTD
Russell 2000 +21.5% YTD
Dow Jones Industrial Average +20.6% YTD

Market Snapshot
Dow 28135.29 +3.33 (0.01%)
Nasdaq 8734.89 +17.56 (0.20%)
SP 500 3168.80 +0.23 (0.01%)
10-yr Note +29/32 1.820
NYSE Adv 1489 Dec 1358 Vol 844.5 mln
Nasdaq Adv 1553 Dec 1593 Vol 2.1 bln

Industry Watch
Strong: Utilities, Information Technology
Weak: Energy, Materials, Financials

Moving the Market

-- Market closes little changed after Phase One deal confirmed and Dec. 15 tariffs avoided

-- 25% tariff rate will remain on $250 billion of Chinese imports, a 15% tariff rate on $120 billion of Chinese imports will be cut to 7.5%

-- China will purchase additional amounts of U.S. farm goods; reportedly between $40-50 billion over a two-year period

-- Treasury yields decline noticeably to undo yesterday's move

WTI crude rises on trade deal
13-Dec-19 15:20 ET
Dow +8.73 at 28140.69, Nasdaq +16.06 at 8733.39, S&P +0.48 at 3169.05

[BRIEFING.COM] The S&P 500 remains unchanged as it has for more than three hours.

One last look inside the S&P 500 shows mixed results. The energy (-0.8%) and materials (-0.7%) sectors underperform, while the utilities (+0.9%) and information technology (+0.6%) sectors outperform. The tech group has benefited from a 1.2% gain in Apple (AAPL 274.73, +3.27).

WTI crude settled up $0.93 (+1.6%) to 60.11/bbl.