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Stocks rebound on stimulus, coronavirus optimism
07-Oct-20 16:20 ET
Dow +530.70 at 28293.46, Nasdaq +210.00 at 11364.53, S&P +58.50 at 3419.47

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

[BRIEFING.COM] The S&P 500 rose 1.7% on Wednesday, primarily driven by renewed stimulus hopes and secondarily coronavirus-related optimism. The Nasdaq Composite gained 1.9%, the Dow Jones Industrial Average gained 1.9%, and the Russell 2000 gained 2.1%.

After President Trump said he called off stimulus negotiations yesterday, he later clarified that he still wanted stimulus but in the form of standalone bills for airlines, small businesses, and citizens ($1200 payments). This jump-started the futures market, and news that Eli Lilly (LLY 148.96, +4.83, +3.4%) requested emergency use authorization for its COVID-19 antibody treatment supported the rebound effort.

Accordingly, airline and retail stocks were some of today's biggest gainers, but the wealth spread around to every sector in the S&P 500 and every Dow component. The cyclical materials (+2.6%), consumer discretionary (+2.5%), and industrials (+2.2%) sectors rose more than 2.0%. The real estate sector (+0.3%) underperformed.

Inside the communication services sector (+0.9%), Netflix (NFLX 534.66, +28.79, +5.7%) rallied nearly 6% after Pivotal Research Group raised its price target on the stock to a Street-high $650 from $600. Facebook (FB 258.12, -0.54, -0.2%) was excluded from today's gains amid antitrust concerns stemming from a report from the House antitrust committee.

Essentially, today was a reset to yesterday's highs before President Trump upset the market with tweets. The S&P 500 closed back above its ascending 50-day moving average (3372).

Separately, the FOMC Minutes for the Sept. 15-16 meeting provided no surprises. Fed officials expressed concerns regarding a recovery if there is no more fiscal stimulus and remained in agreement that the current environment is disinflationary.

U.S. Treasuries finished lower on the longer-end of the curve, sending those yields back to their highest levels of the week. The 2-yr yield finished unchanged at 0.15%, while the 10-yr yield increased four basis points to 0.79%. The U.S. Dollar Index finished flat at 93.64. WTI crude declined 1.8%, or $0.71, to $39.96/bbl.

Reviewing Wednesday's economic data:

Consumer credit contracted by $7.2 billion in August (Briefing.com consensus $14.1 billion) after increasing an upwardly revised $14.7 bln (from $12.3 billion) in July.
The key takeaway from the report is that August marked the sixth straight monthly contraction in revolving credit, which is something that hasn't happened since late 2010 - early 2011, underscoring the more restrictive credit stance adopted by lenders in the wake of the COVID shutdown and rise in unemployment.
The weekly MBA Mortgage Applications Index increased 4.6% following a 4.8% decline in the prior week.

Looking ahead, investors will receive the weekly MBA Mortgage Applications Index and the NFIB Small Business Optimism Index for September on Thursday.

Nasdaq Composite +26.7% YTD
S&P 500 +5.8% YTD
Dow Jones Industrial Average -0.8% YTD
Russell 2000 -3.4% YTD

Market Snapshot
Dow 28293.46 +530.70 (1.91%)
Nasdaq 11364.53 +210.00 (1.88%)
SP 500 3419.47 +58.50 (1.74%)
10-yr Note -4/32 0.785
NYSE Adv 21718 Dec 819 Vol 879.0 mln
Nasdaq Adv 2549 Dec 797 Vol 3.9 bln

Industry Watch
Strong: Materials, Financials, Industrials, Consumer Discretionary
Weak: Communication Services, Energy, Real Estate

Moving the Market

-- President Trump says he still wants standalone relief bills for airlines, small businesses, and citizens

-- Coronavirus treatment optimism

-- Stocks rebound, Treasuries decline

-- Cyclical leadership

WTI crude pulls back modestly
07-Oct-20 15:30 ET
Dow +577.27 at 28340.03, Nasdaq +211.58 at 11366.11, S&P +62.10 at 3423.07

[BRIEFING.COM] The S&P 500 continues to trade higher by 1.8% in a steady, broad-based advance. The Russell 2000 is up 2.3%, extending its monthly outperformance.

One last look at the S&P 500 sectors shows green across the board. Five sectors are up at least 2.0%, including materials (+2.8%), while the real estate sector (+0.7%) continues to lag with a 0.7% gain.

WTI crude futures settled lower by 1.8%, or $0.71, to $39.96/bbl.