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Stock rally aided by positive by media reports, retail sales data
16-Jun-20 16:15 ET
Dow +526.82 at 26290.00, Nasdaq +169.84 at 9895.88, S&P +58.15 at 3124.61

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

[BRIEFING.COM] The S&P 500 gained 1.9% on Tuesday, paced higher by all 11 of its sectors amid positive-sounding media reports and encouraging retail sales data. The Dow Jones Industrial Average (+2.0%) and Nasdaq Composite (+1.8%) performed comparably to the benchmark index, while the Russell 2000 (+2.3%) outperformed.

The session started in risk-on mode after retail sales rebounded 17.7% m/m in May (Briefing.com consensus 9.0%), Bloomberg reported that President Trump was preparing a $1 trillion infrastructure proposal, and the BBC reported on a COVID-19 steroidal treatment in the UK that reduced deaths in severely ill patients.

All 11 S&P 500 sectors were up big. The benchmark index, however, went from being up as much as 2.8% intraday (and up 6.3% from Monday's intraday low) to being up just 0.3% during Fed Chair Powell's semiannual monetary policy testimony before the Senate Banking Committee.

Mr. Powell told lawmakers he thinks there will be long road to a recovery, but the Fed will continue to be proactive in supporting financial markets, adding that the central bank would think about capping yields if rates go up too much on certain parts of the curve. The S&P 500 financials sector (+1.4%) turned negative shortly after this acknowledgement.

The broader market was weaker, though, as recovery hopes were further pressured by news that Texas reported a new high for COVID-19 hospitalizations and that Beijing raised its COVID emergency response level and closed its schools. Investors bought the dip (again), sending the S&P 500 back above the 3100 level on a closing basis.

Five sectors increased by at least 2.0%, including the energy (+2.8%) and health care (+2.4%) sectors at the top. The utilities sector (+0.5%) lagged. In the health care space, Eli Lilly (LLY 163.71, +22.19, +15.7%) shares surged 15.7% after the company announced its breast cancer therapy met its primary endpoint and its insulin drug received FDA approval.

U.S. Treasuries ended the session with losses that caused some curve-steepening activity. The 2-yr yield increased two basis points to 0.21%, and the 10-yr yield increased five basis points to 0.76%. The U.S. Dollar Index increased 0.4% to 97.05. WTI crude rose 3.2%, or $1.20, to $38.56/bbl.

Reviewing Tuesday's economic data:

Retail sales for May in the U.S. surged 17.7% m/m (Briefing.com consensus 9.0%) following an upwardly revised 14.7% decline in April (from -16.4%). Excluding autos, retail sales jumped 12.4% m/m (Briefing.com consensus 5.2%) following an upwardly revised 15.2% decline for April (from -17.2%).
The key takeaway from the Retail Sales report is that it reflects pent-up demand that was unleashed as reopening efforts took root. Granted the April base was severely depressed and sales were still down 6.1% yr/yr, yet this market is thriving right now on hopeful sequential comparisons; hence, this was seen as very encouraging news.
Total industrial production increased 1.4% m/m in May (Briefing.com consensus 3.0%) on the heels of a downwardly revised 12.5% decline (from -11.2%) in April. The capacity utilization rate was 64.8% (Briefing.com consensus 67.9%) versus a downwardly revised 64.0% (from 64.9%) in April.
The key takeaway from the report is that the improvement was all manufacturing-based thanks largely to an uptick in the output of motor vehicles and parts.
The NAHB Housing Market Index for June increased to 58 (Briefing.com consensus 45) from 37 in May.
Business Inventories declined 1.3% in April (Briefing.com consensus -0.4%) following a revised 0.3% decline in March (from -0.2%).

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

Nasdaq Composite +10.3% YTD
S&P 500 -3.3% YTD
Dow Jones Industrial Average -7.9% YTD
Russell 2000 -13.0% YTD

Market Snapshot
Dow 26290.00 +526.82 (2.04%)
Nasdaq 9895.88 +169.84 (1.75%)
SP 500 3124.61 +58.15 (1.90%)
10-yr Note -24/32 0.750
NYSE Adv 2361 Dec 522 Vol 1.3 bln
Nasdaq Adv 2496 Dec 819 Vol 4.6 bln

Industry Watch
Strong: Energy, Materials, Health Care, Information Technology, Consumer Discretionary
Weak: Utilities

Moving the Market

-- Stock rally aided by positive-sounding media reports, encouraging retail sales data

-- President Trump working on $1 trillion infrastructure proposal; news of steroidal treatment in the UK that reduced deaths in severely ill COVID-19 patients

-- Retail sales rebounded 17.7% m/m in May (Briefing.com consensus 9.0%)

-- Volatility following Fed Chair's Powell semiannual monetary policy testimony

WTI crude gains amid IEA rebound forecast
16-Jun-20 15:25 ET
Dow +464.44 at 26227.62, Nasdaq +145.56 at 9871.60, S&P +50.70 at 3117.16

[BRIEFING.COM] The S&P 500 is currently up 1.7%, although it was up as much as 2.8% early in the session.

One last look at the S&P 500 sectors still shows green across the board. The energy (+2.5%), health care (+2.2%), and materials (+2.2%) sectors are up at least 2.0%, while the utilities sector (+0.6%) underperforms.

WTI crude futures settled today's session up $1.20 (+3.2%) to $38.56/bbl. On a related note, the IEA forecast a record rebound in oil demand in 2021.