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Risk sentiment curbed with higher rates and growth-stock losses
18-Mar-21 16:20 ET
Dow -153.07 at 32862.30, Nasdaq -409.03 at 13116.19, S&P -58.66 at 3915.46

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

[BRIEFING.COM] The S&P 500 fell 1.5% on Thursday, as another spike in the 10-yr yield (1.73%) continued to undercut the heavily-weighted growth stocks, whose losses took a toll on risk sentiment. The Nasdaq Composite (-3.0%) and Russell 2000 (-2.9%) dropped around 3.0%. The Dow Jones Industrial Average decreased just 0.5% after setting an all-time high during the day.

Briefly, the 10-yr yield rose past yesterday's pre-FOMC high and flirted with 1.76% today on continued growth/inflation expectations and a report out of the Nikkei that the Bank of Japan is likely to widen its trading band around 0.00% for the 10-yr JGB to 50 basis points from 40 basis points. The 10-yr settled nine basis points above yesterday's settlement at 1.73%.

The mega-cap/growth/technology stocks succumbed to renewed selling interest amid underlying concerns that these widely-owned names might not perform as well as they did in 2020 in a higher interest-rate environment. The lack of a buy-the-dip mentality in these stocks despite long-term rates easing from session highs likely exacerbated selling interest.

Ten of the 11 S&P 500 sectors closed in negative territory, with the information technology (-2.9%), consumer discretionary (-2.6%), and communication services (-2.0%) sectors as influential laggards. The energy sector (-4.7%) declined the most, though, as oil prices ($60.00/bbl, -$4.61, -7.1%) pulled back 7% alongside other risk assets.

Note, crude futures slid into the pit close after France's Prime Minister Castex announced a new monthlong lockdown in 16 regions, including Paris, stirring some concerns about the recovery in global oil demand. A stronger U.S. dollar (91.85, +0.40, +0.4%) was another negative factor for oil prices. Prior to today, crude futures were up 34% this year.

Some investors rotated money into the financials sector (+0.6%), especially early in the day, as the 2s10s rate spread continued to widen, but this trade lost steam as the broader market weakened in the afternoon and into the close. The financials sector was up as much as 2.5% intraday. The 2-yr yield increased three basis points to 0.16%.

Positive news that were lost in the shuffle of today's weakness included the Philadelphia Fed Index soaring to 51.8 in March (Briefing.com consensus 23.5) from 23.1 in February and the EMA confirming that AstraZeneca's (AZN 49.33, -0.74, -1.5%) COVID-19 vaccine is safe and effective. The EMA saw no association with an increase in overall risk of blood clots.

Reviewing Thursday's economic data:

Initial jobless claims for the week ending March 13 increased by 45,000 to 770,000 (Briefing.com consensus 710,000) while continuing claims for the week ending March 6 decreased by 18,000 to 4.124 million.
The key takeaway from the report is the high level (still) of initial jobless claims, yet the perceived takeaway is likely to be that coming weeks should produce more encouraging numbers as reopening activity increases hiring, and reduces layoff, activity.
The Conference Board's Leading Economic Index (LEI) increased 0.2% m/m in February (Briefing.com consensus 0.3%) following an unrevised 0.5% increase in January. February marked the tenth consecutive monthly increase.
The key takeaway from the report is that it has not yet fully captured the momentum of the vaccination program and the passage of the $1.9 trillion stimulus package, which leads one to think it should show a higher reading next month, especially as business activity rebounds from the transitory impact of severely adverse winter weather seen in the South and Midwest in mid-February.
The Philadelphia Fed Index soared to 51.8 in March (Briefing.com consensus 23.5) from 23.1 in February.

There is no economic data of note scheduled for Friday.

Russell 2000 +14.8% YTD
Dow Jones Industrial Average +7.4% YTD
S&P 500 +4.2% YTD
Nasdaq Composite +1.8% YTD

Market Snapshot
Dow 32862.30 -153.07 (-0.46%)
Nasdaq 13116.19 -409.03 (-3.02%)
SP 500 3915.46 -58.66 (-1.48%)
10-yr Note -28/32 1.718
NYSE Adv 697 Dec 2574 Vol 1.1 bln
Nasdaq Adv 971 Dec 3011 Vol 5.6 bln

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

Moving the Market

-- 10-yr yield settles nine basis points higher at 1.73%

-- Weakness in mega-cap/growth stocks; relative strength in bank stocks

-- Energy stocks drop amid 7% pullback in oil prices

WTI crude futures settle lower by 7%
18-Mar-21 15:30 ET
Dow -57.58 at 32957.79, Nasdaq -345.12 at 13180.10, S&P -45.14 at 3928.98

[BRIEFING.COM] The S&P 500 continues to trade near session lows with a 1.1% decline. The Russell 2000 is down 1.8%.

One last look at the S&P 500 sectors shows energy (-4.5%), information technology (-2.5%), consumer discretionary (-2.1%), and communication services (-1.6%) leading the retreat, while the financials (+0.7%), industrials (+0.3%), and health care (+0.1%) sectors trade in positive territory.

WTI crude futures settled sharply lower by 7.1%, or $4.61, to $60.00/bbl. Prior to today, oil prices were up nearly 35% this year.