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S&P 500 clipped by continued rotation out of growth stocks
08-Mar-21 16:20 ET
Dow +306.14 at 31802.44, Nasdaq -310.99 at 12609.18, S&P -20.59 at 3821.35

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

[BRIEFING.COM] The S&P 500 decreased 0.5% on Monday, as money continued to flow out of the heavily-weighted growth stocks and into value/cyclical stocks. The former group contributed to the 2.4% decline in Nasdaq Composite (-2.4%), while the latter helped lift the Dow Jones Industrial Average (+1.0%) to an intraday record high. The Russell 2000 gained 0.5%.

Seven of the 11 S&P 500 sectors closed in positive territory, but it was hard to overcome the continued growth-stock weakness within the information technology (-2.5%), communication services (-1.5%), and consumer discretionary (-0.2%) sectors. The health care sector (-0.3%) was clipped by its biotechnology components.

The Vanguard Mega Cap Growth ETF (MGK 195.08, -4.45, -2.3) fell 2.3%. The Philadelphia Semiconductor Index fell 5.4%. The iShares Nasdaq Biotechnology ETF (IBB 147.23, -2.92, -1.9%) fell 1.9%. Shares of Tesla (TSLA 563.00, -34.95, -5.8%) gave up an early gain and closed sharply lower to extend its recent correction to 37% from its all-time high.

The S&P 500 was up as much as 1.0% in the afternoon on the back of a pro-cyclical trade that drew support from the Senate passing the $1.9 trillion stimulus bill and news that COVID-19 vaccine shots are running at more than two million per day. The stimulus bill will head back to the House, where it's expected to pass later this week.

The financials (+1.3%), materials (+1.3%), and industrials (+1.1%) sectors represented the cyclical leadership, although the utilities sector (+1.4%) advanced the most as the market lost some of its cyclical luster in the second-half of the session. The S&P 500 slipped below its 50-day moving average (3825) on a closing basis.

Separately, another uptick in long-term interest rates, which have risen sharply this year in part due to growth optimism and inflation angst, was attributed by some as a lingering headwind for the growth stocks.

The 10-yr yield increased four basis points to 1.60%, although interestingly, widely-followed money manager David Tepper told CNBC that the 10-yr yield is likely at, or near, the top of a new range due to the higher yields attracting foreign buyers. Mr. Tepper also said stocks like Amazon (AMZN 2951.95, -48.51, -1.6%) look attractive.

The 2-yr yield was unchanged at 0.15%. The U.S. Dollar Index advanced 0.5% to 92.42. WTI crude futures declined 1.6%, or $1.05, to $65.04/bbl.

Monday's economic data was limited to Wholesale Inventories for January, which increased 1.3% m/m (Briefing.com consensus +1.3%) following a revised 0.6% increase in December (from 0.3%). Investors will not receive any notable economic data on Tuesday.

Russell 2000 +11.6% YTD
Dow Jones Industrial Average +3.9% YTD
S&P 500 +1.7% YTD
Nasdaq Composite -2.2% YTD

Market Snapshot
Dow 31802.44 +306.14 (0.97%)
Nasdaq 12609.18 -310.99 (-2.41%)
SP 500 3821.35 -20.59 (-0.54%)
10-yr Note -2/32 1.587
NYSE Adv 1925 Dec 1251 Vol 1.2 bln
Nasdaq Adv 1954 Dec 1950 Vol 5.9 bln

Industry Watch
Strong: Industrials, Financials, Materials, Utilities
Weak: Information Technology, Communication Services, Consumer Discretionary, Health Care

Moving the Market

-- S&P 500 slips lower amid continued weakness in the technology/growth stocks

-- Cyclical/value stocks outperformed amid rotational interest; helped lift Dow to record intraday high

-- 10-yr yield settled at 1.60%