Sector Investing

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Mixed session to close out the week, financials lagged
19-Mar-21 16:20 ET
Dow -234.33 at 32627.97, Nasdaq +99.07 at 13215.26, S&P -2.36 at 3913.10

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

[BRIEFING.COM] The S&P 500 decreased 0.1% on Friday, as the broad market struggled to gain traction after the benchmark index briefly slipped below the 3900 level in early action. The Nasdaq Composite (+0.8%) and Russell 2000 (+0.9%) reclaimed early losses and closed higher after underperforming yesterday, while the Dow Jones Industrial Average (-0.7%) underperformed in the red.

Like the major indices, sector performances were mixed: six S&P 500 sectors closed lower, while five closed higher. The communication services (+0.8%) and consumer discretionary (+0.8%) sectors finished as leaders amid some mega-cap support; conversely, the financials (-1.2%), real estate (-1.3%), industrials (-0.7%), and materials (-0.5%) sectors lagged.

Note, there was some weakness into the close, which coincided with a surge in trading volume related to quadruple witching-options expiration activity.

The financials sector underperformed after the Fed announced prior to the open that it will let the temporary Supplementary Leverage Ratio ("SLR") exemption expire on March 31. Since May 15, 2020, banks were permitted to exclude Treasuries in the calculation of their SLR.

The thinking was that banks might have to raise more capital if they don't offload more of their Treasury holdings and/or reduce buybacks. The news contributed to a profit-taking mindset, even as Treasury yields moved off lows following the announcement.

The 10-yr yield was trading at 1.68% pre-announcement, then rose to 1.74% before settling unchanged at 1.73%. The 2-yr yield decreased one basis point to 0.16%. The U.S. Dollar Index increased 0.1% to 91.96. WTI crude futures ($61.45/bbl, +1.45, +2.4%) rebounded 2%, trimming its weekly decline to 6%.

Facebook (FB 290.11, +11.49, +4.1%) was a key mover today with a 4% gain. The stock might have benefited from optimistic comments from CEO Mark Zuckerberg that Apple's (AAPL 119.99, -0.54, -0.5%) privacy rule changes could help Facebook. Separately, shares of FedEx (FDX 279.58, +16.07, +6.1%) rose 6% following its better-than-expected earnings report.

Visa (V 206.90, -13.76, -6.2%) and Nike (NKE 137.49, -5.68, -4.0%) were individual laggards that weighed on the Dow. Visa fell 6% after The Wall Street Journal reported the company is being investigated by the Department of Justice over its debit-card practices. Nike fell 4% after missing revenue estimates due to shipping disruptions.

Investors did not receive any economic data of note on Friday. Looking ahead, Existing Home Sales for February will be released on Monday.

Russell 2000 +15.8% YTD
Dow Jones Industrial Average +6.6% YTD
S&P 500 +4.2% YTD
Nasdaq Composite +2.5% YTD

Market Snapshot
Dow 32627.97 -234.33 (-0.71%)
Nasdaq 13215.26 +99.07 (0.76%)
SP 500 3913.10 -2.36 (-0.06%)
10-yr Note -1/32 1.722
NYSE Adv 1758 Dec 1420 Vol 3.5 bln
Nasdaq Adv 2434 Dec 1481 Vol 7.4 bln

Industry Watch
Strong: Communication Services, Consumer Discretionary, Health Care
Weak: Financials, Real Estate, Industrials, Materials

Moving the Market

-- Market struggled to gain traction after lower start, closed mixed

-- Fed announced it will let the Supplementary Leverage Ratio (SLR) exemption expire on March 31

-- Bank stocks underperformed

Crude futures trim weekly decline
19-Mar-21 15:25 ET
Dow -115.20 at 32747.10, Nasdaq +84.83 at 13201.02, S&P +6.86 at 3922.32

[BRIEFING.COM] The S&P 500 continues to cling onto a slim 0.2% gain. The Russell 2000 outperforms with a 0.6% gain.

One last look at the S&P sectors shows communication services (+1.0%), energy (+0.8%), and utilities (+0.8%) outperforming in the green, while the financials sector (-1.0%) remains the most influential laggard. No other sector is down more than 0.3%.

WTI crude futures settled higher by 2.4%, or $1.45, to $61.45/bbl to recoup some of yesterday's 7% drop. Crude futures still ended the week with a 6.3% decline.