Sector Investing

[ReturntoSender]

Stocks close lower to temper recent bullishness
18-Nov-20 16:15 ET

Dow -344.93 at 29438.36, Nasdaq -97.74 at 11801.52, S&P -41.74 at 3567.93

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

[BRIEFING.COM] The S&P 500 fell 1.2% on Wednesday for a second straight decline that tempered the recent bullishness in the market. The Nasdaq Composite declined 0.8%, the Dow Jones Industrial Average declined 1.2%, and the Russell 2000 declined 1.3% after setting an intraday record high early in the session.

For most of the day, the market struggled to gain any traction despite a host of positive news related to a vaccine, economic data, and corporate earnings. Presumably, this was because the market was pricing in a lot of the good news in its record-setting rally this month and needed to consolidate those gains.

Selling appeared to pick up late in the afternoon after New York Governor Cuomo announced that New York City public schools will temporarily close due to surging coronavirus cases. Mr. Cuomo previously warned this was a legitimate possibility, but the decision served as a convenient excuse to curb risk sentiment today.

All 11 S&P 500 sectors finished in negative territory, led lower by the energy (-2.9%), utilities (-1.9%), health care (-1.8%), and real estate (-1.7%) sectors with losses over 1.5%. The industrials sector (-0.5%) was the relative outperformer today.

The industrials sector and other cyclical groups appeared to draw early support from Pfizer (PFE 36.31, +0.27, +0.8%) and BioNTech (BNTX 90.44, +3.51, +4.0%) indicating that their COVID-19 vaccine is 95% effective after concluding their Phase 3 study. The companies will soon file an FDA application for emergency use authorization.

Separately, October housing starts increased a faster-than-expected seasonally adjusted annual rate of 1.53 million units (Briefing.com consensus 1.445 mln), Target (TGT 166.85, +3.81, +2.3%) reported strong quarterly results, and Tesla (TSLA 486.64, +45.03, +10.2%) was upgraded to Overweight from Equal-Weight at Morgan Stanley.

Tesla and Target reacted positively to their related news, but investors took profits in Boeing (BA 203.30, -6.75, -3.2%) and Lowe's (LOW 146.72, -13.14, -8.2%) despite some good news. The FAA approved the 737 MAX safe to fly again, and Lowe's beat top and bottom-line estimates but its Q4 EPS guidance may have disappointed.

U.S. Treasuries finished near their flat lines in a lackluster session for bonds. The 2-yr yield and 10-yr yield increased one basis point each to 0.17% and 0.88%, respectively. The U.S. Dollar Index finished flat at 92.40. WTI crude futures gained 0.9%, or $0.37, to $41.80/bbl following a smaller-than-expected weekly inventory build.

Reviewing Wednesday's economic data:

Housing starts in October increased 4.9% m/m (and 14.2% yr/yr) to a seasonally adjusted annual rate of 1.53 million units (Briefing.com consensus 1.445 mln), hitting their highest pace since February when they stood at 1.567 million. Building permits were flat at 1.545 million (Briefing.com consensus 1.55 mln), but remained ahead of the 1.536 million pace registered in January.
The key takeaway from the report is that there was continued strength in single-family starts, which jumped 6.4% m/m to a seasonally adjusted annual rate of 1.179 million. That is 14.5% higher than the pace for single-family starts seen in February and reflects the strong demand for new homes that has been driven by the pandemic, low mortgage rates, and the tight supply of existing homes for sale.
The weekly MBA Mortgage Applications Index decreased 0.3% following a 0.5% decline in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report, Existing Home Sales for October, the Philadelphia Fed Index for November, and the Conference Board's Leading Economic Index for October on Thursday.

Nasdaq Composite +31.5% YTD
S&P 500 +10.4% YTD
Russell 2000 +6.0% YTD
Dow Jones Industrial Average +3.2% YTD


Market Snapshot
Dow 29438.36 -344.93 (-1.16%)
Nasdaq 11801.52 -97.74 (-0.82%)
SP 500 3567.93 -41.74 (-1.16%)
10-yr Note -23/32 0.877

NYSE Adv 1130 Dec 1888 Vol 989.8 mln
Nasdaq Adv 1349 Dec 2153 Vol 4.6 bln


Industry Watch
Strong: Industrials

Weak: Energy, Health Care, Utilities, Real Estate


Moving the Market
-- Recent bullishness is tempered with 1% losses in major indices

-- NYC announced temporary school closures due to the coronavirus

-- Market unable to gain traction despite good news regarding a vaccine, corporate earnings, and economic data



WTI crude futures settle in the green
18-Nov-20 15:25 ET

Dow -87.63 at 29695.66, Nasdaq +16.87 at 11916.13, S&P -8.22 at 3601.45
[BRIEFING.COM] The S&P 500 is down 0.3% and has traded within yesterday's trading range. The benchmark index is on pace to close lower for the second straight day in a healthy consolidation trend.

One last look at the S&P 500 sectors shows energy (-1.2%), utilities (-1.1%), and health care (-0.9%) down the most, while the industrials (+0.4%), consumer discretionary (+0.1%), and materials (+0.1%) sectors cling onto small gains.

WTI crude futures settled higher by 0.9%, or $0.37, to $41.80/bbl following a smaller-than-expected build in weekly crude inventories.