Sector Investing

[ReturntoSender]

Stock rally driven by positive remdesivir update
29-Apr-20 16:20 ET
Dow +532.31 at 24633.86, Nasdaq +306.98 at 8914.72, S&P +76.12 at 2939.51

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

[BRIEFING.COM] The S&P 500 climbed 2.7% on Wednesday, primarily driven by positive remdesivir news and aided by better-than-feared earnings reports and a market-friendly reminder from the Fed. The Nasdaq Composite rose 3.6%, the Dow Jones Industrial Average rose 2.2%, and the Russell 2000 rose 4.8%.

The day started with Gilead Sciences (GILD 83.14, +4.47, +5.7%) affirming that remdesivir, an antiviral treatment for COVID-19, met its primary endpoint in an NIAID placebo-controlled study. The news helped the market open noticeably higher, as it fueled reopening hopes and overshadowed data depicting Q1 GDP contracting at a 4.8% annualized rate (Briefing.com consensus -4.3%).

The ensuing advance in stocks was paced by the S&P 500 energy (+7.4%), communication services (+5.1%), and information technology (+4.2%) sectors, while the defensive-oriented consumer staples (-0.4%) and utilities (-0.9%) sectors were left out of the rally.

Alphabet (GOOG 1341.48, +107.81, +8.7%), MasterCard (MA 283.69, +19.09, +7.2%), and Boeing (BA 139.00, +7.70, +5.9%) contributed to the bullish price action following their earnings reports. Energy stocks received an added boost from the 22% spike in oil prices ($15.13/bbl, +2.76, +22.3%).

Later in the day, the Fed unanimously voted to maintain the target range for the fed funds rate at 0.00-0.25%, as was expected, and said rates will remain there until the economy is on track to achieve the Fed's goals of full employment and price stability. The inference is that rates will stay there for much longer, as the record unemployment isn't expected to return to normal anytime soon.

Fed Chair Powell acknowledged that low rates alone won't revive economic activity and reiterated the Fed's commitment to using its full range of policy tools. Mr. Powell also said legislators should embrace policies that protect against avoidable insolvencies. Market reaction was relatively muted to the policy directive and the Fed Chair's comments.

While most stocks finished the day higher, notable holdouts included Starbucks (SBUX 76.86, -1.83, -2.3%), Advanced Micro Devices (AMD 53.66, -1.85, -3.3%), and General Electric (GE 6.58, -0.22, -3.2%) following their earnings reports.

Small-cap companies Hertz Global (HTZ 4.00, -1.00, -20.0%) and Chesapeake Energy (CHK 26.85, -2.33, -8.0%) sold off on news of potential bankruptcy filings.

U.S. Treasuries were relatively unchanged throughout the session, as bond investors were unfazed by the equity rally given the weak GDP data and precarious economic environment. The 2-yr yield declined one basis point to 0.19%, while the 10-yr yield increased two basis points to 0.63%. The U.S. Dollar Index declined 0.3% to 99.53.

Reviewing Wednesday's economic data:

First quarter GDP declined at an annualized rate of 4.8% (Briefing.com consensus -4.3%) while the GDP Price Deflator was 1.3% (Briefing.com consensus 1.1%). This was the largest decline in GDP since the fourth quarter of 2008.
The key takeaway from the report is that it hints at how ugly the Advance Q2 GDP report will be given that shutdown measures in the U.S. didn't start to gain steam until the latter half of March.
Pending Home Sales dropped 20.8% in March after increasing a revised 2.3% in February (from +2.4%).
The weekly Mortgage Applications Index declined 3.3% following a 0.3% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, Personal Income and Spending for March, the Q1 Employment Cost Index and the Chicago PMI for April on Thursday.

Nasdaq Composite -0.7% YTD
S&P 500 -9.0% YTD
Dow Jones Industrial Average -13.7% YTD
Russell 2000 -18.4% YTD

Market Snapshot
Dow 24633.86 +532.31 (2.21%)
Nasdaq 8914.72 +306.98 (3.57%)
SP 500 2939.51 +76.12 (2.66%)
10-yr Note -1/32 0.622
NYSE Adv 2562 Dec 350 Vol 1.2 bln
Nasdaq Adv 2644 Dec 596 Vol 4.3 bln

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

Moving the Market

-- Stock market rallies, closes at highest level since early March

-- Gilead Sciences' (GILD) remdesivir drug meets primary endpoint in NIAID study

-- Alphabet (GOOG) shares climb on better-than-feared quarterly results

-- Fed keeps rates unchanged, commits to market-friendly policy

-- WTI crude futures rises 22%

WTI crude gains 22%
29-Apr-20 15:25 ET
Dow +626.52 at 24728.07, Nasdaq +337.29 at 8945.03, S&P +89.10 at 2952.49

[BRIEFING.COM] The S&P 500 is up 3.1%, and the Russell 2000 is up 5.6%.

One last look at the S&P 500 sectors shows energy (+6.9%), communication services (+5.8%), and information technology (+4.4%) firmly in the lead, while the utilities (+0.1%) and consumer staples (+0.2%) sectors cling onto small gains.

WTI crude futures settled higher by $2.76 (+22.3%) to $15.13/bbl.