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Skid Halted
02-Mar-20 16:20 ET
Dow +1293.96 at 26703.29, Nasdaq +384.80 at 8952.17, S&P +136.01 at 3090.23

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

[BRIEFING.COM] The major averages surged on Monday with the S&P 500 (+4.6%) recording its first gain since February 19 while the Dow Jones Industrial Average (+5.1%) outperformed.

Equities started the new week on a firmly higher note even though the number of new coronavirus cases in the United States continued increasing while China reported its worst Manufacturing (35.7) and Non-Manufacturing PMI (29.6) readings in history.

China's PMI readings were much weaker than what was reported at the depth of the financial crisis, which promptly led to more calls for stimulus from the People's Bank of China. The Bank of Japan, meanwhile, offered to purchase JPY500 bln worth of JGBs. On the home front, the fed funds futures market continued pointing to expectations for a 50-basis point cut at the March 18 meeting or before.

Growing stimulus hopes contributed to another day of gains in the Treasury market, pressuring the 10-yr yield to a fresh record low (1.059%) in morning trade. Treasuries finished the day near their starting levels with the 10-yr yield down four basis points to 1.09%.

All eleven sectors finished the day in positive territory with nine groups climbing at least 3.0%. Countercyclical sectors like utilities (+5.9%), consumer staples (+5.5%), and real estate (+5.1%) outperformed throughout the day while the top-weighted technology sector (+5.7%) also made a significant contribution to the Monday advance.

The utilities sector returned into positive territory for Q1 (+0.9%) while consumer staples rallied behind Costco (COST 309.14, +28.00, +10.0%). The wholesale retailer spiked off a six-month low after Cleveland Research upgraded the stock to Buy after reports of very strong store traffic over the weekend. Costco will report its Q2 results on Thursday. Clorox (CLX 172.01, +12.59, +7.9%) made for another notable outperformer in the staples sector, rebounding from Friday's sharp loss.

On the cyclical side, technology (+5.7%) had a very good showing even though chipmakers lagged. The PHLX Semiconductor Index still jumped 3.5%, but most components finished behind the broader market. However, that underperformance was overshadowed by a formidable showing from large sector components. Apple (AAPL 298.81, +25.45, +9.3%) surged nearly 10.0% to levels from Tuesday. The stock was upgraded to Outperform at Oppenheimer.

Today's rally overshadowed continued weakness among transport stocks. The Dow Jones Transportation Average (+0.9%) was down for the bulk of the session, but a late rally helped the group turn positive. However, airlines like JetBlue Airways (JBLU 15.57, -0.21, -1.3%), American Airlines (AAL 18.86, -0.19, -1.0%), and United Airlines (UAL 61.26, -0.33, -0.5%) remained weak on expectations for more coronavirus-related disruptions to travel.

Similarly, cruise operators like Carnival (CCL 33.06, -0.40, -1.2%) and Norwegian Cruise Line Holdings (NCLH 35.59, -1.67, -4.5%) saw continued pressure after Japanese cruise operator Luminous Cruise filed for bankruptcy due to a collapse in demand. Royal Caribbean (RCL 80.56, +0.15, +0.2%) spent the bulk of the session in the red but turned positive in the late afternoon.

Reviewing today's economic data:

The ISM Manufacturing Index for February managed to eke out an expansion reading at 50.1 (Briefing.com consensus 50.5), but that was weaker than expected and down from 50.9 in January. The dividing line between growth and contraction is 50.0.
The key takeaway from the report is that there were noted concerns in respondents' commentary about the negative impact of the coronavirus, which is telling because the virus has continued to spread globally since the report was compiled, implying there is an increased risk of the index falling below 50.0 in March.
Total construction spending increased 1.8% m/m in January (Briefing.com consensus +0.7%) on the heels of an upwardly revised 0.2% increase (from -0.2%) in December. Residential spending was up 2.0% m/m and nonresidential spending was up 1.6% m/m.
The key takeaway from the report is that January marked the largest m/m increase in construction spending since February 2018, bolstered by continued strength in residential spending.

February auto and truck sales will be reported throughout Tuesday.

Nasdaq Composite -0.2% YTD
S&P 500 -4.4% YTD
Dow Jones Industrial Average -6.4% YTD
Russell 2000 -9.0% YTD

Market Snapshot
Dow 26703.29 +1293.96 (5.09%)
Nasdaq 8952.17 +384.80 (4.49%)
SP 500 3090.23 +136.01 (4.60%)
10-yr Note -8/32 1.088
NYSE Adv 2156 Dec 500 Vol 1.71 bln
Nasdaq Adv 2346 Dec 916 Vol 4.18 bln

Industry Watch
Strong: Consumer Staples, Real Estate, Utilities, Technology
Weak: Energy, Industrials, Communication Services

Moving the Market

Growing stimulus hopes fuel rebound in equities

China reported weakest Manufacturing PMI and Non-Manufacturing PMI readings on record

Eyeing Midday Highs
02-Mar-20 15:25 ET
Dow +817.90 at 26227.23, Nasdaq +213.11 at 8780.48, S&P +76.99 at 3031.21

[BRIEFING.COM] The major averages are trying to revisit their session highs with the S&P 500 (+2.6%) trading about ten points below its best level of the day. The Dow (+3.2%) continues trading ahead of the S&P 500 while the Russell 2000 (+1.0%) remains behind.

Barring a late swoon, the stock market is on track to end the day with solid gains while Treasuries already settled near their best levels of the day, sending the 10-yr yield lower by four basis points to 1.09%.

Commodities also had a good showing today with WTI crude climbing $1.99, or 4.4%, to $46.79/bbl. Crude oil rallied after touching its lowest level since December 2018 in overnight trade.