Sector Investing

[ReturntoSender]

Stocks close higher despite headline negativity
15-May-20 16:20 ET
Dow +60.08 at 23685.42, Nasdaq +70.84 at 9014.58, S&P +11.20 at 2863.57

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

[BRIEFING.COM] The S&P 500 (+0.4%), Dow Jones Industrial Average (+0.3%), and Nasdaq Composite (+0.8%) ended Friday's session modestly higher, recovering from early declines that followed more weak economic data and increased U.S.-China tensions. The Russell 2000 outperformed with a 1.6% gain after a rough week for the small-cap index.

The communication services (+1.3%), consumer discretionary (+1.1%), and materials (+1.0%) sectors led today's gains, helping the S&P 500 rebound from an early 1.3% decline. The utilities (-1.4%) and financials (-0.7%) sectors were Friday's laggards.

Early in the day, economic data showed total retail sales decline a record 16.4% m/m in April (Briefing.com consensus -11.9%) and industrial production decline 11.2% m/m in April (Briefing.com consensus -12.1%). The market wasn't visibly upset by the data, though, likely due to the prevailing view that it can't get any worse.

Instead, there was a negative reaction to news that the Trump administration moved to block semiconductor shipments to China's Huawei Technologies. With relations already strained because of the coronavirus outbreak, the move renewed worries about potential Chinese retaliation against U.S. companies.

Investors bought buy the dip, though, except in the semiconductor space given the headline negativity. The Philadelphia Semiconductor Index declined 2.2%, which included an earnings-related decline in Applied Materials (AMAT 52.04, -2.39, -4.4%).

Outside the semiconductor space, oil prices capped a strong week with another solid performance. WTI crude futures rose 7.1%, or $1.94, to $29.38/bbl today to extend its weekly advance to 18.8%.

DraftKings (DKNG 29.23, +3.92, +15.5%) was an individual standout after the sports betting company topped EPS estimates and provided positive commentary regarding its outlook.

U.S. Treasuries ended the week with modest losses. The 2-yr yield increased one basis point to 0.15%, and the 10-yr yield increased two basis points to 0.64%. The U.S. Dollar Index declined 0.1% to 100.38.

Reviewing Friday's economic data:

Total retail sales declined a record 16.4% m/m in April (Briefing.com consensus -11.9%) while retail sales, excluding autos, declined 17.2% m/m (Briefing.com consensus -8.2%).
The key takeaway from the report is that the broad-based weakness is a representation of the adverse spending shock that resulted from shutdown measures, announced pay cuts, and the massive jump in unemployment.
Industrial production declined 11.2% m/m in April (Briefing.com consensus -12.1%), which was the largest monthly drop in the 101-year history of the index. The capacity utilization rate fell from 73.2% to 64.9% (Briefing.com consensus 64.0%), which is 14.9 percentage points below its long-run average and a record-low in a series that dates back to 1967.
The key takeaway from the report is that it is a reflection of how industrial production cratered amid shutdown orders designed to contain the spread of COVID-19. On a yr/yr basis, industrial production was down 15.0%.
The University of Michigan's Index of Consumer Sentiment rose to 73.7 in the preliminary reading for May (Briefing.com consensus 67.4) from 71.8 in April.
The key takeaway from the report is that attitudes about current conditions improved while sentiment surrounding the outlook continued to deteriorate, pinched by concerns about financial prospects that were most notable among upper income households. That is apt to be a headwind for a pickup in consumer spending.
The Empire State Manufacturing Survey for May checked in at -48.5 (Briefing.com consensus -58.0) following the prior month's reading of -78.2.
March job openings decreased to 6.191 mln from a revised 7.004 mln in February (from 6.882 mln).
Business inventories decreased 0.2% in March, while the February reading was revised down to -0.5% from -0.4%.

Looking ahead, investors will receive the NAHB Housing Market Index for May on Monday.

Nasdaq Composite +0.5% YTD
S&P 500 -11.4% YTD
Dow Jones Industrial Average -17.0% YTD
Russell 2000 -24.7% YTD

Market Snapshot
Dow 23685.42 +60.08 (0.25%)
Nasdaq 9014.58 +70.84 (0.79%)
SP 500 2863.57 +11.20 (0.39%)
10-yr Note -25/32 0.650
NYSE Adv 1625 Dec 1217 Vol 1.4 bln
Nasdaq Adv 1985 Dec 1235 Vol 4.2 bln

Industry Watch
Strong: Communication Services, Consumer Discretionary, Materials
Weak: Utilities, Financials

Moving the Market

-- Stocks recoup early losses to lift major indices into positive territory

-- Increased tensions with China; Retail sales and industrial production were noticeably weak in April

-- Relative weakness in the semiconductor space after Trump administration moves to block semiconductor shipments to Huawei

WTI crude caps strong week with another x% gain
15-May-20 15:30 ET
Dow +50.00 at 23675.34, Nasdaq +50.58 at 8994.32, S&P +5.82 at 2858.19

[BRIEFING.COM] The S&P 500 continues to drift higher with a 0.2% gain. The Russell 2000 outperforms with a 1.5% gain to reduce its weekly decline to 5.6%.

One last look inside the S&P 500 sectors shows most trading higher now. The communication services (+1.1%) and consumer discretionary (+1.0%) sectors lead, while the utilities (-2.5%) and real estate (-1.1%) sectors lag.

WTI crude futures settled today's session higher by $1.94 (+7.1%) to $29.38/bbl. For the week, oil was up 18.8%.