Sector Investing

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Rough start to 2021
04-Jan-21 16:15 ET
Dow -382.59 at 30223.83, Nasdaq -189.84 at 12698.45, S&P -55.42 at 3700.65

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

[BRIEFING.COM] The major indices were down more than 2.0% on the first trading day of 2021, as investors took profits, but they pared losses in the afternoon. The S&P 500 (-1.5%), Dow Jones Industrial Average (-1.3%), Nasdaq Composite (-1.5%), and Russell 2000 (-1.5%) declined between 1.3-1.5%. The S&P 500 and Dow briefly set all-time highs at the open.

The short-lived positive open was attributed to Tesla (TSLA 729.77, +24.10, +3.4%) reporting record Q4 deliveries, expansionary December manufacturing PMIs out of the eurozone and Asia, M&A activity, and positive momentum. Tesla, foreign equities, and acquired companies still had positive outings, but the positive momentum in the broader market quickly dissipated.

There weren't any specific selling catalysts, suggesting investors came back from the holidays ready to take profits while others preferred to hold off until the outcome of the Senate election runoffs in Georgia tomorrow. Selling was widespread with ten of the 11 S&P 500 sectors finishing in negative territory.

Influential weakness came out of the information technology (-1.8%) and industrials (-2.6%) sectors, although the real estate (-3.3%) sector was the weakest link. The energy sector (+0.1%) eked out a slim gain despite lower oil prices ($47.59/bbl, -0.68, -1.4%).

Hedging interest to protect against further downside was manifested in the four-point increase in the CBOE Volatility Index (26.97, +4.22, +18.6%), while safe-having positioning brought Treasury yields down from intraday highs.

The 2-yr yield finished flat at 0.12%, and the 10-yr yield finished flat at 0.92% after touching 0.95% in the morning. The U.S. Dollar Index finished flat after being down 0.6% intraday.

In M&A activity, FLIR Systems (FLIR 52.24, +8.41, +19.2%) agreed to be acquired by Teledyne (TDY 362.39, +10.80, +13.0%) in a cash and stock deal valued at $8.0 billion. Magellan Health (MGLN 93.64, +10.80, +13.0%) agreed to be acquired by Centene (CNC 62.09, +2.06, +3.4%) for $95 per share, or a total enterprise value of $2.2 billion, in cash.

Reviewing Monday's economic data:

Total construction spending increased 0.9% in November (Briefing.com consensus 0.9%) after increasing a revised 1.6% (from 1.3%) in October. Total private construction spending rose 1.2% m/m and total public construction spending decreased 0.2%.
The key takeaway from the report is that residential construction spending showed strength for another month as mortgage rates remained low, supporting demand for homes outside urban areas.
The December IHS Markit Manufacturing PMI increased to 57.1 from 56.5 in November.

Looking ahead, investors will receive the ISM Manufacturing Index for December on Tuesday.

Nasdaq Composite +1.5% YTD
Russell 2000 +1.5% YTD
S&P 500 +1.5% YTD
Dow Jones Industrial Average +1.3% YTD

Market Snapshot
Dow 30223.83 -382.59 (-1.25%)
Nasdaq 12698.45 -189.84 (-1.47%)
SP 500 3700.65 -55.42 (-1.48%)
10-yr Note 0/32 0.916
NYSE Adv 911 Dec 2188 Vol 1.2 bln
Nasdaq Adv 1570 Dec 2147 Vol 6.4 bln

Industry Watch
Strong: Energy
Weak: Information Technology, Industrials, Real Estate, Utilities

Moving the Market

-- Major indices retraced opening gains and posted noticeable declines amid widespread selling pressure

-- Profit-taking interest

-- Some focus on tomorrow's Senate election runoffs in Georgia

WTI crude futures settle in the red
04-Jan-21 15:30 ET
Dow -472.24 at 30134.18, Nasdaq -218.08 at 12670.21, S&P -64.42 at 3691.65

[BRIEFING.COM] The S&P 500 is trading lower by 1.8%, and the Russell 2000 is trading lower by 1.5%.

One last look at the S&P 500 sectors shows real estate (-3.0%), industrials (-2.7%), and information technology (-2.1%) down more than 2.0%, while the energy sector (-0.2%) is the only sector down less than 1.0%.

WTI crude futures settled lower by 1.4%, or $0.68, to $47.59/bbl.