Sector Investing

[ReturntoSender]

Dow closes at record high, but loses steam after Phase One signing
15-Jan-20 16:20 ET
Dow +90.55 at 29030.13, Nasdaq +7.37 at 9258.72, S&P +6.14 at 3289.29

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

[BRIEFING.COM] The stock market set new highs in the moments leading up to signing of the Phase One trade deal on Wednesday, but a fade in momentum left the S&P 500 up just 0.2% for the session. The Dow Jones Industrial Average (+0.3%) closed at a record high, the Nasdaq Composite increased 0.1%, and Russell 2000 increased 0.4%.

The USTR released the full text of the agreement after the signing, but the lack of surprising details wasn't conducive for a risk-on mindset, as the news was already priced in. Investors didn't necessarily sell the event, but a cautious view that the stock market is due for a pullback contributed to a defensive mindset.

The defensive-oriented S&P 500 utilities (+1.4%), health care (+0.9%), real estate (+0.8%), and consumer staples (+0.7%) sectors were today's best-performing sectors. Conversely, the energy (-0.7%), financials (-0.6%), and consumer discretionary (-0.3%) sectors finished in the red.

The financials sector was pressured by a modest decline in Treasury yields and by the negative reactions to earnings results from Bank of America (BAC 34.67, -0.65, -1.8%), U.S. Bancorp (USB 54.97, -1.62, -2.9%), and Goldman Sachs (GS 245.21, -0.45, -0.2%). BlackRock (BLK 530.26, +11.94, +2.3%) pleased investors with its results.

Target (TGT 117.00, -8.26, -6.6%) reported relatively disappointing holiday sales results due to softer-than-expected performance in categories such as electronics, toys, and portions of its home businesses. On a related note, the Fed's Beige Book noted that consumer spending expanded at a moderate pace during the last six weeks of 2019.

The Philadelphia Semiconductor Index fell 1.2% amid some profit-taking interest, with shares of Taiwan Semi (TSM 58.39, -1.93, -3.2%) pulling back from record territory in front of its earnings report tomorrow morning.

U.S. Treasuries ended the session on a higher note as part of a defensive-oriented trade. The 2-yr yield and the 10-yr yield declined three basis points each to 1.55% and 1.79%, respectively. The U.S. Dollar Index declined 0.2% to 97.23. WTI crude declined 0.8%, or $0.44, to $57.86/bbl.

Reviewing Wednesday's economic data:

The Producer Price Index for final demand increased 0.1% (Briefing.com consensus +0.2%) and so did the Producer Price index for final demand, excluding food and energy (Briefing.com consensus +0.2%). Those changes left the yr/yr increases at 1.3% and 1.1%, respectively, versus 1.1% and 1.3% in November.
The key takeaway from the report is that it isn't going to convince the Federal Reserve that it needs to raise its policy rate soon.
The Mortgage Bankers Association reported a 30.2% surge in weekly mortgage applications, which included a 16% increase in purchase application volume.
The Empire State Manufacturing Survey for January increased to 4.8 (Briefing.com consensus 2.8) from the prior month's reading of 3.5.
The Federal Reserve's Beige Book for December noted that economic activity during the last six weeks of 2019 continued expanding at a modest pace.

Looking ahead, investors will receive the following reports on Thursday: Retail Sales for December, the Philadelphia Fed Index for January, the NAHB Housing Market Index for January, Business Inventories for November, Import and Export Prices for December, and weekly Initial and Continuing Claims.

Nasdaq Composite +3.2% YTD
S&P 500 +1.8% YTD
Dow Jones Industrial Average +1.7% YTD
Russell 2000 +0.8% YTD

Market Snapshot
Dow 29030.13 +90.55 (0.31%)
Nasdaq 9258.72 +7.37 (0.08%)
SP 500 3289.29 +6.14 (0.19%)
10-yr Note +3/32 1.784
NYSE Adv 1578 Dec 1262 Vol 871.8 mln
Nasdaq Adv 1784 Dec 1378 Vol 2.6 bln

Industry Watch
Strong: Real Estate, Health Care, Utilities
Weak: Financials, Energy

Moving the Market

-- Stock market hits new intraday highs, but currently trades near its lows

-- U.S. and China sign Phase One trade deal

-- Relative strength in the defensive-oriented sectors; weakness in financials sector

-- Producer prices barely increase in December, mortgage applications spike 30%

WTI crude extends losses
15-Jan-20 15:25 ET
Dow +80.50 at 29020.08, Nasdaq -0.68 at 9250.67, S&P +2.49 at 3285.64

[BRIEFING.COM] The S&P 500 continues to trade in the green with a 0.1% gain, although it is trading near session lows.

One last look inside the S&P 500 shows a defensive-oriented tilt, as the utilities (+1.3%), real estate (+0.8%), health care (+0.7%), and consumer staples (+0.5%) sectors outperform the broader market. The energy (-0.8%) and financaisl (-0.8%) sectors underperform.

WTI crude settled down $0.44 (-0.8%) to $57.86/bbl. It is now down 5% this year.