Sector Investing

[ReturntoSender]

Mega-caps find renewed strength, lift market
12-Aug-20 16:20 ET

Dow +289.93 at 27976.84, Nasdaq +229.42 at 11012.31, S&P +46.66 at 3380.35

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

[BRIEFING.COM] The S&P 500 gained 1.4% on Wednesday and came within a few points of closing at a new record high amid renewed strength in the mega-caps. The Nasdaq Composite set the performance pace with a 2.1% gain. The Dow Jones Industrial Average increased 1.1%, and the Russell 2000 increased 0.5%.

After leading yesterday's decline, the mega-caps returned to usual form with a strong rebound. Apple (AAPL 452.04, +14.54, +3.3%) rose 3%; Tesla (TSLA 1554.76, +180.37, +13.1%) surged 13% after announcing a 5:1 stock split; and NVIDIA (NVDA 457.61, +23.61, +5.4%) rose 5% after its price target was raised to a Street-high of $540 from $450 at Cascend Securities.

The mega-cap stocks carried the S&P 500 information technology (+2.3%) and consumer discretionary (+1.7%) sectors into the leadership roles today. The Philadelphia Semiconductor Index also had a strong day, rising 3.4%.

Gains broadened out to the defensive-oriented health care (+1.7%), utilities (+1.5%), real estate (+1.3%), and consumer staples (+1.3%) sectors, too. Interestingly, the financials sector (-0.3%) sat this one out after outperforming in recent sessions as part of the rotation into value and cyclical stocks.

In vaccine news, Moderna (MRNA 69.52, +0.55, +0.8%) reached a $1.525 billion deal with the U.S. government to manufacture and deliver 100 million doses of its COVID-19 vaccine. MRNA shares gained just 0.8%, though, after starting the day with an 11% gain.

Elsewhere, Treasury Secretary Mnuchin reportedly offered to resume coronavirus relief talks but Democratic congressional leadership said that administration officials remained unwilling to budge from their prior stance. The standstill did not deter trading sentiment today.

U.S. Treasuries finished little changed in a quiet session. The 2-yr yield was unchanged at 0.16%, and the 10-yr yield increased one basis point to 0.67%. The U.S. Dollar Index decreased 0.2% to 93.44. WTI crude rose 2.3%, or $0.94, to $42.60/bbl.

Reviewing Wednesday's economic data:

The Consumer Price Index (CPI) for July increased 0.6% m/m (Briefing.com consensus 0.3%) following a 0.6% increase in June. Excluding food and energy, CPI rose 0.6% m/m (Briefing.com consensus 0.2%) after a 0.2% increase in June.
The key takeaway from the report is that while it followed in the footsteps of yesterday's hotter than expected PPI report, it is unlikely to have significant policy implications, since the Fed has made it clear that discussions about a rate hike are not being conducted at this time.
The Treasury Budget showed a $63.0 bln deficit for July. The budget data is not seasonally adjusted, so the July deficit cannot be compared to the June deficit of $864.1 bln. The deficit in July 2019 was $119.7 bln.
The key takeaway from the report is that the delayed tax filing deadline prevented the July statement from showing another big deficit as outlays nearly doubled year-over-year.
The weekly MBA Mortgage Applications Index rose 6.8% following a 5.1% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report and Import and Export Prices for July on Thursday.

Nasdaq Composite +22.7% YTD
S&P 500 +4.6% YTD
Dow Jones Industrial Average -2.0% YTD
Russell 2000 -5.1% YTD


Market Snapshot
Dow 27976.84 +289.93 (1.05%)
Nasdaq 11012.31 +229.42 (2.13%)
SP 500 3380.35 +46.66 (1.40%)
10-yr Note -2/32 0.667

NYSE Adv 1844 Dec 1084 Vol 770.9 mln
Nasdaq Adv 1825 Dec 1426 Vol 3.6 bln


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

Weak: Financials, Energy, Industrials


Moving the Market
-- Market rebounds in mostly broad-based advance

-- Mega-caps resumed leadership roles in buy-the-dip trade

-- Value and cyclical stocks underperformed



WTI crude gains 2%
12-Aug-20 15:25 ET

Dow +343.01 at 28029.92, Nasdaq +246.92 at 11029.81, S&P +53.44 at 3387.13
[BRIEFING.COM] The S&P 500 is now up 1.6% and is vying for a new record close.

One last look at the S&P 500 sectors shows ten of the 11 groups contributing to the advance. Information technology (+2.5%), health care (+2.0%), utilities (+1.9%), and consumer discretionary (+1.8%) outperform, while the financials sector (-0.2%) sits this one out.

WTI crude futures settled higher by 2.3% (+$0.94) to $42.60/bbl.