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Pro-cyclical trade extends record-setting advance in Dow
10-Mar-21 16:20 ET
Dow +464.28 at 32297.02, Nasdaq -4.99 at 13068.85, S&P +23.37 at 3898.81

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

[BRIEFING.COM] The S&P 500 advanced 0.6% on Wednesday, as value and cyclical stocks reclaimed their recent leadership roles and inflation concerns were put on hold. The pro-cyclical trade disproportionally benefited the Dow Jones Industrial Average (+1.5%) and Russell 2000 (+1.8%), with the Dow setting intraday and closing record highs.

The Nasdaq Composite (-0.04%), however, closed slightly lower after being up as much as 1.6% intraday. The S&P 500 information technology sector (-0.4%) and Philadelphia Semiconductor Index (-1.8%) were other growth-stock pockets of weakness.

Prior to the open, the February Consumer Price Index (CPI) report didn't reveal any surprising upticks in inflation, with total CPI increasing an expected 0.4% m/m and core CPI increasing just 0.1% (Briefing.com consensus +0.2%). The yr/yr increases remained below 2.0%, although many still expect upwards pressure in the coming months.

Notwithstanding those inflation expectations, equity futures reacted positively to the report, long-term interest rates backed down from pre-CPI highs, and most stocks opened in positive territory. Ten of the 11 S&P 500 sectors closed higher, including the cyclical energy (+2.6%), financials (+1.9%), and materials (+1.6%) sectors atop the standings on the back of follow through from buyers.

The so-called reopening trade was aided by the House passing the $1.9 trillion stimulus bill, as expected, and New York Governor Cuomo saying that restaurants in New York City and New Jersey will expand indoor dining to 50% beginning March 19.

Like the price action in the Nasdaq, the information technology sector (-0.4%) was up as much as 1.1% in early action, briefly adding to Tuesday's 3.4% gain. Amid a lack of negative catalysts, the rebound rally in growth stocks appeared gassed out, even as Treasury yields declined.

The 10-yr yield decreased three basis points to 1.52%, with the market showing little reaction to the tepid $38 billion 10-yr note auction in the afternoon. The 2-yr yield decreased one basis point to 0.15%. The U.S. Dollar Index decreased 0.2% to 91.79. WTI crude futures increased 0.7%, or $0.43, to $64.45/bbl.

In corporate news, Roblox (RBLX 69.50, +24.50, +54.4%) had a solid public debut at the NYSE. General Electric (GE 13.25, -0.75, -5.4%) lowered its FY21 EPS guidance following its confirmed merger deal between its aircraft leasing business and AerCap (AER 53.39, -2.61, -4.7%).

Reviewing Wednesday's economic data:

Total CPI increased 0.4% m/m, as expected, while core CPI, which excludes food and energy, rose 0.1% (Briefing.com consensus 0.2%). The monthly changes left total CPI up 1.7% yr/yr, versus 1.4% in January; however, the yr/yr increase in core CPI edged lower to 1.3% from 1.4% in January.
The key takeaway from the report is the recognition that it didn't contain any headline surprises today to fan the flames of inflation concerns, which many expect to fire up in coming months.
The February Treasury Budget showed a $310.9 bln deficit, versus a $235.3 bln deficit in the same period a year ago. The budget data is not seasonally adjusted, so the February deficit can't be compared to the January deficit of $162.8 bln.
The fiscal year-to-date budget deficit is $1.05 trln versus -$624.5 bln for the same period a year ago. The budget deficit over the last 12 months is $3.55 trln versus -$3.48 trln in January.
The weekly MBA Mortgage Applications Index decreased 1.3% following a 0.5% increase in the prior week.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.

Russell 2000 +15.7% YTD
Dow Jones Industrial Average +5.5% YTD
S&P 500 +3.8% YTD
Nasdaq Composite +1.4% YTD

Market Snapshot
Dow 32297.02 +464.28 (1.46%)
Nasdaq 13068.85 -4.99 (-0.04%)
SP 500 3898.81 +23.37 (0.60%)
10-yr Note -1/32 1.542
NYSE Adv 2357 Dec 823 Vol 1.2 bln
Nasdaq Adv 2480 Dec 1422 Vol 5.9 bln

Industry Watch
Strong: Financials, Energy, Materials
Weak: Information Technology, Communication Services

Moving the Market

-- Stocks trade higher in broad-based advance led by value/cyclical stocks

-- Dow hits another all-time high

-- February CPI report eases inflation concerns

WTI crude futures settle in positive territory
10-Mar-21 15:25 ET
Dow +528.35 at 32361.09, Nasdaq +30.61 at 13104.45, S&P +32.90 at 3908.34

[BRIEFING.COM] The major indices continue to trade broadly higher, with the Russell 2000 out in the lead with a 1.9% gain. The Nasdaq underperforms with a 0.3% gain.

One last look at the S&P 500 sectors shows energy (+2.5%), materials (+2.0%), and financials (+2.0%) trading higher by at least 2.0%, while the information technology (-0.03%) remains the only sector trading lower amid relative weakness in its growth-stock components.

A turnaround in oil prices has aided energy stocks. WTI crude futures settled higher by 0.7%, or $0.43, to $64.45/bbl after trading modestly lower intraday.