Dow and Russell 2000 close at record highs despite scene on Capitol Hill
06-Jan-21 16:15 ET
Dow +437.80 at 30829.34, Nasdaq -78.17 at 12740.79, S&P +21.28 at 3748.14 https://www.briefing.com/stock-market-update
[BRIEFING.COM] The Dow Jones Industrial Average (+1.4%) and Russell 2000 (+4.0%) closed at record highs on Wednesday, as small-caps and cyclical stocks exhibited strength on the prospect of a Democrat-controlled Senate. The market, however, closed off session highs, as risk sentiment waned after pro-Trump protesters breached Capitol Hill.
The S&P 500 finished with a 0.6% gain after being up 1.5% intraday, while the Nasdaq Composite declined 0.6% amid weakness in the mega-caps.
Briefly, investors were pricing in expectations for more fiscal stimulus after Democrats flipped at least one Senate seat in Georgia following yesterday's runoff elections, according to media projections. The second race remained too close to call as of 4:00 p.m. ET but favored the Democrats, who would need this seat to control the Senate by the slimmest of margins.
Accordingly, the cyclical financials (+4.4%), materials (+4.1%), energy (+3.0%), and industrials (+2.4%) sectors finished atop the standings with strong gains. The possibility of increased tech scrutiny, however, reined in the influential information technology (-1.8%) and communication services (-0.7%) sectors.
Investors were buying the dip in technology stocks after the open, but the rebound effort was squandered after the protesters breached Capitol Hill shortly after 2:00 p.m. ET during the certification of the electoral college results. The technology sector had briefly returned to its flat line before this.
Despite the scene on Capitol Hill, gold prices ($1909.00/ozt, -2.4%) remained suppressed and there was no inclination to buy the dip in Treasuries, which were selling off on expectations for further economic stimulus. The 10-yr yield rose nine basis points to 1.04%, while the 2-yr yield increased two basis points to 0.14%. The U.S. Dollar Index was little changed at 89.40.
Tesla (TSLA 755.98, +20.87, +2.8%) was among the few mega-caps that faired extremely well today after Morgan Stanley raised its price target on the stock to a Street-high of $810. Shares of Apple (AAPL 126.60, -4.41, -3.4%), Microsoft (MSFT 212.25, -5.65, -2.6%), Amazon (AMZN 3138.38, -80.13, -2.5%), and Facebook (FB 263.34, -7.63, -2.8%) fell between 2.5-3.4%.
Separately, Walgreens Boots Alliance (WBA 43.03, +1.87, +4.5%) agreed to sell most of its Alliance Healthcare business to AmerisourceBergen (ABC 106.17, +8.41, +8.6%) for approximately $6.5 billion in cash and stock.
Reviewing Wednesday's economic data:
Factory orders for manufactured goods increased 1.0% in November (Briefing.com consensus 0.6%) after increasing a revised 1.3% (from 1.0%) in October. This is the seventh consecutive monthly increase in factory orders.
The key takeaway from the report is that it showed another increase in business spending, as nondefense capital goods excluding aircraft increased 0.5% in November after rising a revised 2.6% in October.
The ADP Employment Change report for December estimated private-sector payrolls decreased by 123,000 (Briefing.com consensus +120,000). The November reading was revised lower to 304,000 from 307,000.
The December IHS Markit Services PMI decreased to 54.8 from 55.3 in November.
The weekly MBA Mortgage Applications Index increased 1.7% following a 0.8% increase in the prior week.
Looking ahead, investors will receive the ISM Non-Manufacturing Index for December, the weekly Initial and Continuing Claims report, and the Trade Balance for November on Thursday.
Russell 2000 +4.2% YTD
Dow Jones Industrial Average +0.7% YTD
S&P 500 -0.2% YTD
Nasdaq Composite -1.1% YTD
Dow 30829.34 +437.80 (1.44%)
Nasdaq 12740.79 -78.17 (-0.61%)
SP 500 3748.14 +21.28 (0.57%)
10-yr Note -29/32 1.033
NYSE Adv 1967 Dec 1142 Vol 1.4 bln
Nasdaq Adv 2247 Dec 1399 Vol 7.5 bln
Strong: Energy, Materials, Financials, Industrials, Utilities
Weak: Information Technology, Communication Services, Real Estate
Moving the Market
-- Democrats flip at least one Senate seat in Georgie, according to media projections
-- Capitol Hill breached by protestors
-- Technology stocks underperform, small-caps and cyclical stocks rise
-- 10-yr Treasury note yield rises past 1.00%
Crude futures settle above $50 per barrel
06-Jan-21 15:30 ET
Dow +461.94 at 30853.48, Nasdaq -51.44 at 12767.52, S&P +39.90 at 3766.76
[BRIEFING.COM] The S&P 500 is trading higher by 0.6%, while the Nasdaq is back in the red with a 0.4% decline amid weakness in the mega-cap stocks, which are down more than 2.0%.
One last look at the sectors shows financials (+4.3%), materials (+3.9%), energy (+2.5%), and industrials (+2.2%) still up more than 2.0%; conversely, the information technology (-1.4%) and communication services (-0.6%) sectors are influential laggards in negative territory.
WTI crude futures settled higher by 1.3%, or $0.66, to $50.57/bbl.