Sector Investing

[ReturntoSender]

Stocks rebound amid fiscal and monetary stimulus plans
17-Mar-20 16:25 ET
Dow +1048.86 at 21237.38, Nasdaq +430.19 at 7334.14, S&P +143.06 at 2529.19

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

[BRIEFING.COM] The S&P 500 rebounded 6.0% on Tuesday, as investors reacted positively to additional monetary stimulus measures and the possibility of an estimated $1 trillion fiscal stimulus package. The Dow Jones Industrial Average rose 5.2%, the Nasdaq Composite rose 6.2%, and the Russell 2000 rose 6.7%.

The plan from the White House reportedly includes $500-550 billion for direct payments or tax cuts to Americans, $200-300 billion for small business assistance, and $50-100 billion for airline industry relief. The administration is also considering support for homeowners whose income was cut due to the coronavirus, according to Bloomberg.

The Fed, meanwhile, established a temporary commercial paper funding facility to help alleviate strains induced on commercial paper markets. Companies typically acquire short-term financing from this market. The Treasury Secretary approved the decision and will provide the Fed $10 billion in credit protection and the ability to purchase up to $1 trillion in commercial paper if needed.

Elsewhere, efforts to contain the spread of COVID-19 continued to be made: NYC Mayor Bill De Blasio said New Yorkers should be prepared for an order to "shelter in place," the EU temporarily closed external borders, and Apple (AAPL 252.63, +10.42, +4.3%) extended store closures outside Greater China until further notice.

Despite the stimulus plans, and preventative measures, it was a defensive-minded rally led by the S&P 500 utilities (+13.1%), consumer staples (+8.4%), and real estate (+6.9%) sectors. The energy sector (+0.7%) underperformed amid continued weakness in the price of oil ($27.02/bbl, -1.83, -6.3%).

This defensiveness might be attributed to an understanding that economic disruptions will continue to lead to a negative, and currently unquantifiable, impact to the economy. This was painfully manifested in Marriott (MAR 75.24, -11.18, -12.9%) starting to furlough workers without pay. On a related note, Facebook (FB 149.42, +3.41, +2.3%) said it would give $1000 to employees.

Separately, the slight underperformance of the Dow was mainly due to the loss in shares of Boeing (BA 124.14, -5.47, -4.2%), which had its S&P credit rating downgraded to BBB due to weaker cash flows. President Trump did say he wants to help the company, though.

U.S. Treasuries sold off in a curve-steepening trade, not because of a better economic view but because of worries that longer-dated bonds will be needed to fund a rising deficit. The 2-yr yield rose eight basis points to 0.45%, and the 10-yr yield rose 27 basis points to 1.00%. The U.S. Dollar Index rose 1.7% to 99.81.

Reviewing Tuesday's economic data, which was wasn't fully representative of current conditions caused by the coronavirus:

Total retail sales declined 0.5% m/m (Briefing.com consensus +0.1%) following an upwardly revised 0.6% increase (from 0.3%) in January. Excluding autos, retail sales were down 0.4% m/m (Briefing.com consensus +0.1%) after an upwardly revised 0.6% increase (from 0.3%) in January.
The key takeaway from this report is that it reflected soft spending activity before the the coronavirus impact (and reaction) truly hit the U.S. That's not comforting knowing that the retail sales data in March is going to be absolutely awful.
Industrial production increased 0.6% m/m in February, as expected, following a downwardly revised 0.5% decline (from -0.3%) in January. Total capacity utilization was 77.0% (Briefing.com consensus 77.1%) following a downwardly revised 76.6% (from 76.8%) in January.
The key takeaway from the report is that the good feelings about the pickup in output in February will be stunted by the reality that March output is apt to look much worse given the economic shutdown measures employed to help curb the spread of the coronavirus.
The NAHB Housing Market Index for March declined to 72 (Briefing.com consensus 74) from 74 in February.
The January Job Openings and Labor Turnover Survey showed job openings increase to 6.963 million from a revised 6.552 million in December (from 6.423 million).
Business inventories decreased 0.1% in January, as expected, while the December reading was unrevised at 0.1%.

Looking ahead, investors will receive Housing Starts and Building Permits for February and the weekly MBA Mortgage Applications Index on Wednesday.

Nasdaq Composite: -18.3%
S&P 500: -21.7%
Dow Jones Industrial Average: -21.4%
Russell 2000: -33.7%

Market Snapshot
Dow 21237.38 +1048.86 (5.20%)
Nasdaq 7334.14 +430.19 (6.23%)
SP 500 2529.19 +143.06 (6.00%)
10-yr Note -26/32 1.087
NYSE Adv 1695 Dec 1174 Vol 2.0 bln
Nasdaq Adv 2216 Dec 1101 Vol 4.8 bln

Industry Watch
Strong: Utilities, Communication Services, Consumer Staples
Weak: Energy

Moving the Market

-- Stocks stage rebound effort following yesterday's massive losses

-- Treasury Secretary Mnuchin says administration wants to give cash to American workers immediately

-- Fed establishes Commercial Paper Funding Facility; will conduct another $500 billion repo operation

-- Relative strength in the defensive-oriented sectors

WTI crude extends decline, closes down 6%
17-Mar-20 15:30 ET
Dow +570.61 at 20759.13, Nasdaq +291.45 at 7195.40, S&P +91.45 at 2477.58

[BRIEFING.COM] The S&P 500 currently trades higher by 3.8%.

One last look inside the S&P 500 shows utilities (+10.3%), consumer staples (+6.4%), and real estate (+6.0%) outperforming the broader market, while the energy sector (unch) trades near its flat line.

WTI crude settled the session down $1.83 (-6.3%) to $27.02/bbl.