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Bulls retain control in another record-setting session
01-Dec-20 16:20 ET
Dow +185.28 at 29823.86, Nasdaq +156.37 at 12355.02, S&P +40.82 at 3662.47

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

[BRIEFING.COM] The S&P 500 (+1.1%) and Nasdaq Composite (+1.3%) closed at fresh record highs on Tuesday, as the market continued to feed off the recent bullish momentum and recovery optimism. The Dow Jones Industrial Average (+0.6%) and Russell 2000 (+0.9%) followed behind.

Briefly, the 2021 recovery narrative was supported by renewed stimulus talks, Pfizer (PFE 39.41, +1.10, +2.9%) seeking approval for its COVID-19 vaccine in Europe, UnitedHealth (UNH 341.19, +4.85, +1.4%) and Micron (MU 67.08, +2.99, +4.7%) issuing upside guidance, and by some relatively positive economic data overseas.

The gains were relatively broad with the communication services (+2.0%) and financials (+1.6%) sectors leading the advance. The industrials sector (-0.2%) was the lone holdout amid an observation that November manufacturing activity in the U.S. slowed down slightly more than expected and the corresponding ISM Employment Index (48.4%) slid into contraction territory.

The market ran into a speed bump late in the afternoon on news that Senate Majority Leader McConnell disapproved the $908 billion bipartisan stimulus package proposed by several lawmakers earlier in the day. Mr. McConnell prefers to combine $429 bln in unused Fed funding toward a year-end spending bill, according to CNBC.

The stimulus situation harked on Fed Chair Powell's congressional warning that the outlook remains "extraordinarily uncertain." Nevertheless, it's almost a certainty that more fiscal relief is coming in one form or another. Mr. Powell testified on the CARES Act today along with Treasury Secretary Mnuchin.

Separately, shares of Zoom Video (ZM 406.31, -72.05, -15.1%) succumbed to profit-taking interest following its better-than-expected earnings report and upbeat guidance. Moderna (MRNA 141.01, -11.73, -7.7%) faced similar selling pressure after starting the day with a 16% gain.

In the U.S. Treasury market, the 2s10s yield curve spread widened to a 2020 high of 76 bps. The 2-yr yield increased three basis points to 0.17%, while the 10-yr yield rose nine basis points to 0.93%. The U.S. Dollar Index fell 0.8% to 91.16 amid relative strength in the euro, which was indicative of expectations for a European recovery.

Reviewing Tuesday's economic data:

The ISM Manufacturing Index slipped to 57.5% in November (Briefing.com consensus 58.0%) from 59.3% in October. The dividing line between expansion and contraction is 50.0%, so the November reading reflects an acceleration in manufacturing activity, albeit at a slower pace than the prior month.
The key takeaway from the report is the understanding that the Employment Index fell back into contraction mode, sliding to 48.4% from 53.2%, although the continued strength in new orders and the backlog of orders should mitigate some of the concerns surrounding the employment contraction in November.
Total construction spending increased 1.3% m/m in October (Briefing.com consensus +0.7%) on the heels of a downwardly revised 0.5% decline (from +0.3%) in September. Total private construction spending rose 1.4% m/m and total public construction spending increased 1.0%.
The key takeaway from the report is the ongoing strength in residential construction spending, which is an offshoot of low mortgage rates and the pandemic driving strong demand for new homes in suburban areas.
The Markit Manufacturing PMI for November was revised lower to 56.7% (Briefing.com consensus 58.0%) from 59.3% in the preliminary reading.

Looking ahead, investors will receive the ADP Employment Change Report for November and the weekly MBA Mortgage Applications Index on Wednesday.

Nasdaq Composite +37.7% YTD
S&P 500 +13.4% YTD
Russell 2000 +10.1% YTD
Dow Jones Industrial Average +4.5% YTD

Market Snapshot
Dow 29823.86 +185.28 (0.63%)
Nasdaq 12355.02 +156.37 (1.28%)
SP 500 3662.47 +40.82 (1.13%)
10-yr Note -30/32 0.924
NYSE Adv 2167 Dec 920 Vol 1.1 bln
Nasdaq Adv 2064 Dec 1516 Vol 6.4 bln

Industry Watch
Strong: Financials, Communication Services, Information Technology
Weak: Industrials

Moving the Market

-- S&P 500 and Nasdaq close at fresh record highs

-- Bullish momentum, recovery optimism

-- 2s-10s yield curve spread widens to 2020 high of 76 basis points

WTI crude futures settle on lower note
01-Dec-20 15:30 ET
Dow +203.34 at 29841.92, Nasdaq +143.46 at 12342.11, S&P +40.80 at 3662.45

[BRIEFING.COM] The S&P 500 has hit a speed bump and is currently up 1.1% to trade off prior highs.

One last look at the S&P 500 sectors shows communication services (+1.9%) and financials (+1.7%) still in the lead, while the industrials sector (+0.2%) underperforms with a slim gain. The latter is being pressured by data showing a slight slowdown in the pace of manufacturing activity for November.

WTI crude futures settled lower by 1.8%, or $0.81, to $44.56/bbl.