Dow closes at record high in strong session
24-Feb-21 16:15 ET
Dow +424.51 at 31961.86, Nasdaq +132.77 at 13598.00, S&P +44.06 at 3925.43 https://www.briefing.com/stock-market-update
[BRIEFING.COM] The S&P 500 advanced 1.1% on Wednesday in a strong session, as the market remained influenced by reopening optimism, a buy-the-dip mindset, and Fed Chair Powell. The Russell 2000 gained 2.3%, the Dow Jones Industrial Average gained 1.4% for a record close, and the Nasdaq Composite gained 1.1%.
The large-cap indices started the session slightly lower amid relative weakness in the mega-cap and growth stocks, as the 10-yr Treasury note yield touched 1.43% on persistent expectations for economic growth and inflation. The S&P 500 information technology sector (+1.5%) and Philadelphia Semiconductor Index (+3.2%) were both down 1.5% in early action, until Fed Chair Powell started speaking around 10:00 a.m. ET.
In his second day of testimony, Fed Chair Powell told the House Financial Services Committee that it could take three or more years for the economy to reach the Fed's inflation goal. In other words, despite the inflation expectations being priced in the Treasury market, the central bank will hold firm on its extremely accommodative monetary policy.
Yields started to come down from session highs, mega-cap and growth stocks came off session lows, and value/cyclical stocks extended their early gains. The energy (+3.6%), financials (+2.0%), and industrials (+1.9%) sectors advanced the most. The utilities (-1.2%) and consumer staples (-0.03%) sectors, on the other hand, closed lower.
Positive developments supporting growth expectations included the FDA acknowledging that Johnson & Johnson's (JNJ 162.59, +2.15, +1.3%) COVID-19 vaccine is safe with no specific concerns identified that would preclude an emergency use authorization, and new home sales increasing 4.3% m/m to a seasonally adjusted annual rate of 923,000 in January (Briefing.com consensus 855,000).
The reopening trade was kind to shares of Boeing (BA 229.34, +17.22, +8.1%), which rose 8%. Shares of GameStop (GME 91.71, +46.74, +103.9%), meanwhile, doubled late in the day without disrupting the market flow this time around.
The 10-yr yield finished three basis points higher at 1.39%, and the 2-yr yield finished three basis points higher at 0.13%. The U.S. Dollar Index decreased 0.1% to 90.07. WTI crude futures increased another 2.5%, or $1.56, to $63.24/bbl.
Reviewing Wednesday's economic data:
New home sales increased 4.3% m/m to a seasonally adjusted annual rate of 923,000 in January (Briefing.com consensus 855,000) from an upwardly revised 885,000 (from 842,000) in December. On a yr/yr basis, new home sales were up 19.3%.
The key takeaway from the report is that new home sales, which are counted when contracts are signed, ramped up again as demand remained strong in the face of higher prices. Separately, the South remains a hot spot for relocation, evidenced by a 40.4% yr/yr increase in new home sales.
The weekly MBA Mortgage Applications Index dropped 11.4% following a 5.1% decline in the prior week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, Durable Goods Orders for January, the second estimate for Q4 GDP, and Pending Home Sales for January on Thursday.
Russell 2000 +15.7% YTD
Nasdaq Composite +5.5% YTD
S&P 500 +4.5% YTD
Dow Jones Industrial Average +4.4% YTD
Dow 31961.86 +424.51 (1.35%)
Nasdaq 13598.00 +132.77 (0.99%)
SP 500 3925.43 +44.06 (1.14%)
10-yr Note -3/32 1.385
NYSE Adv 2145 Dec 1067 Vol 1.2 bln
Nasdaq Adv 2823 Dec 1136 Vol 5.6 bln
Strong: Financials, Energy, Industrials, Materials
Weak: Utilities, Consumer Staples
Moving the Market
-- Cyclical stocks continue to outperform in so-called reflation trade
-- Treasury yields continue to rise amid expectations for economic growth and inflation
-- Fed Chair Powell says it could take another three years for central bank to meet inflation goal
-- Covid-19 vaccine from Johnson & Johnson (JNJ) could soon receive emergency use authorization
WTI crude futures settle above $63 per barrel
24-Feb-21 15:25 ET
Dow +427.15 at 31964.50, Nasdaq +92.16 at 13557.39, S&P +40.09 at 3921.46
[BRIEFING.COM] The S&P 500 continues to trade higher by 1.0%, bringing it into positive territory for the week.
One last look at the S&P 500 sectors shows ten of the 11 sectors trading higher. The energy (+3.5%), industrials (+2.0%), financials (+1.9%), and information technology (+1.2%) sectors lead the advance, while the utilities sector (-0.9%) remains the only sector trading lower.
WTI crude futures settled higher by 2.5%, or $1.56, to $63.24/bbl.