Sector Investing

[ReturntoSender]

Stocks keep rally going, cyclical and value stocks outperformed
05-Aug-20 16:20 ET
Dow +373.05 at 27201.52, Nasdaq +57.23 at 10998.47, S&P +21.26 at 3327.77

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

[BRIEFING.COM] The S&P 500 advanced 0.6% on Wednesday, as gains broadened out to many of the cyclical and value-oriented stocks. The Nasdaq Composite increased 0.5% to close at another record high, while the Dow Jones Industrial Average (+1.4%) and Russell 2000 (+1.9%) rose more than 1.0%.

Investors welcomed reports that lawmakers made progress toward the next coronavirus relief bill, a promising-sounding vaccine update from Novavax (NVAX 173.49, +16.32, +10.4%) on a Phase 1/2 trial for healthy adults ages 18-59, and the ISM Non-Manufacturing Index increasing to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June.

The news fed into the recovery/reopening optimism that lifted the cyclical S&P 500 industrials (+2.0%), materials (+1.5%), and financials (+1.5%) sectors into the top spots today. The big move in Novavax also kept the spirit alive in other momentum trades like in Amazon (AMZN 3205.03, +66.20, +2.1%), which carried the consumer discretionary sector (+1.4%) higher.

Walt Disney (DIS 127.61, +10.32, +8.8%) was the biggest gainer within the Dow, with shares climbing 9% after impressing shareholders with strong subscriber numbers for its streaming platform. The company also reported a surprise quarterly profit.

Laggards were found primarily in the defensive-oriented utilities (-1.3%), real estate (-0.6%), and consumer staples (-0.2%) sectors. Generally, it was also a tough day for growth stocks, except Square (SQ 146.20, +9.37, +6.9%), which rallied to fresh record highs following its earnings report.

Shares of Teladoc (TDOC 202.01, -47.41, -19.0%) and Livongo Health (LVGO 128.06, -16.47, -11.4%) pulled back sharply after the companies agreed to merge in a $18.5 billion cash-and-stock deal.

U.S. Treasuries retraced a bulk of the moves from Tuesday. The 2-yr yield declined one basis point to 0.11%, while the 10-yr yield increased three basis points to 0.54%. The U.S. Dollar Index fell 0.5% to 92.89. WTI crude futures gained 1.2%, or $0.56, to $42.24/bbl, hitting a five-month high in the process.

Reviewing Wednesday's economic data:

The ISM Non-Manufacturing Index increased to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June. This was the third straight monthly improvement and the highest reading for the index since February 2019.
The key takeaway from the report is the recognition that the Employment Index fell even as business activity improved some, which suggests a reticence on the part of employers to bring on new employees given the heightened state of uncertainty about the demand outlook.
The Trade Balance report for June showed a narrowing of the trade deficit to $50.7 billion (Briefing.com consensus -$49.3 billion) from a downwardly revised $54.8 billion (from -$54.6 billion) in May.
The key takeaway from this more dated report is that export and import activity increased in June as economies were reopening following the suppressed activity from March to May.
The ADP Employment Change report for July estimated 167,000 jobs were added private-sector payrolls (Briefing.com consensus 1.600 million), which was well below expectations.
The June trade balance report showed a deficit of $50.7 billion (Briefing.com consensus -$53.0 billion). The May deficit was revised up to $54.8 billion from $54.6 billion.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.

Nasdaq Composite +22.6% YTD
S&P 500 +3.0% YTD
Dow Jones Industrial Average -4.7% YTD
Russell 2000 -7.3% YTD

Market Snapshot
Dow 27201.52 +373.05 (1.39%)
Nasdaq 10998.47 +57.23 (0.52%)
SP 500 3327.77 +21.26 (0.64%)
10-yr Note -26/32 0.552
NYSE Adv 2041 Dec 923 Vol 899.5 mln
Nasdaq Adv 2201 Dec 1070 Vol 4.0 bln

Industry Watch
Strong: Financials, Materials, Industrials, Consumer Discretionary, Energy
Weak: Real Estate, Utilities, Consumer Staples

Moving the Market

-- Cyclical and value-oriented stocks outperformed, leading S&P 500 to fourth straight advance

-- Positive developments on stimulus talks, vaccine progress, earnings reports

-- Walt Disney (DIS) climbs 9% after reporting strong subscriber numbers

-- ISM Non-Manufacturing Index for July increased more than expected

WTI crude hits 5-month high
05-Aug-20 15:30 ET
Dow +316.75 at 27145.22, Nasdaq +47.06 at 10988.30, S&P +18.60 at 3325.11

[BRIEFING.COM] The S&P 500 is up 0.6% and is on pace to close higher for the fourth straight session.

One last look at the S&P 500 sectors shows eight trading higher and three trading lower. Materials (+1.8%), industrials (+1.4%), and financials (+1.6%) remain in the lead as part of the cyclical trade today, while the utilities (-1.2%), real estate (-0.7%), and consumer staples (-0.4%) sectors trade lower.

WTI crude futures hit a 5-month high but settled well off session highs with a 1.2% gain (+$0.56) at $42.24/bbl.