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Large-cap indices close higher amid rebalancing efforts
22-Mar-21 16:15 ET
Dow +103.23 at 32731.20, Nasdaq +162.31 at 13377.57, S&P +27.49 at 3940.59

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

[BRIEFING.COM] The S&P 500 advanced 0.7% on Monday, as quarter-end rebalancing efforts drove the mega-caps higher and suppressed Treasury yields, although it did close off session highs (+1.1%). The Nasdaq Composite increased 1.2%, while the Dow Jones Industrial Average increased just 0.3% and the Russell 2000 (-0.9%) fell victim to rebalancing activity.

In the home stretch of the first quarter, which has greatly favored cyclical/value/small caps stocks, money appeared to disproportionately flow into the mega-cap/growth-stock laggards like Apple (AAPL 123.39, +3.40, +2.8%) and Tesla (TSLA 670.00, +15.13, +2.3%) as well as U.S. Treasuries. The 10-yr yield decreased five basis points to 1.68%, which was a double-bonus for growth stocks.

In terms of sector performances, the information technology sector (+1.9%) was the most influential gainer given it's the most heavily-weighted sector in the S&P 500. A strong showing from the semiconductor stocks supported the cause. The Philadelphia Semiconductor Index advanced 2.2%.

The consumer staples (+1.2%), real estate (+1.1%), health care (+0.9%), and communication services (+0.8%) sectors followed suit, but there were still more declining issues than advancing issues at the NYSE and Nasdaq. The financials (-1.3%), energy (-1.0%), industrials (-0.1%), and utilities (-0.1%) sectors closed lower.

The underperformance of the cyclical stocks despite encouraging U.S. Phase 3 trial data for AstraZeneca's (AZN 51.20, +1.99, +4.0%) COVID-19 vaccine supported the view that price action was more technically-oriented than fundamentally-driven. AstraZeneca plans to file for emergency use authorization in the coming weeks.

In addition, growth stocks barely reacted to the initial release of a New York Times report that President Biden is considering tax increases to help pay for an infrastructure/climate change bill. The administration later called the report "premature and not a reflection of the White House's thinking."

Separately, Kansas City Southern (KSU 249.09, +24.93, +11.1%) agreed to be acquired by Canadian Pacific (CP 356.53, -21.95, -5.8%) in a cash and stock transaction representing an enterprise value of $29 billion. The agreement valued KSU at $275 per share, or a 23% premium from Friday's close, but regulatory risks kept shares below this price.

The 2-yr yield was unchanged at 0.15%. The U.S. Dollar Index declined 0.1% to 91.80. WTI crude futures settled little changed at $61.47/bbl.

Reviewing Monday's economic data:

Existing home sales decreased 6.6% m/m in February to a seasonally adjusted annual rate of 6.22 million (Briefing.com consensus 6.50 million) from a downwardly revised 6.66 million (from 6.69 million) in January. Total sales in February were up 9.1% from a year ago.
The key takeaway from the report is that the supply of existing homes for sale remains near all-time low levels. That is driving up the pace of price increases well beyond the pace of income gains, which is going to create affordability pressures for prospective buyers along with rising mortgage rates.

Looking ahead, investors will receive New Home Sales for February and the Current Account Balance for the fourth quarter on Tuesday.

Russell 2000 +14.8% YTD
Dow Jones Industrial Average +6.9% YTD
S&P 500 +4.9% YTD
Nasdaq Composite +3.8% YTD

Market Snapshot
Dow 32731.20 +103.23 (0.32%)
Nasdaq 13377.57 +162.31 (1.23%)
SP 500 3940.59 +27.49 (0.70%)
10-yr Note +3/32 1.695
NYSE Adv 1453 Dec 1783 Vol 785.2 mln
Nasdaq Adv 1676 Dec 2260 Vol 5.2 bln

Industry Watch
Strong: Information Technology, Real Estate, Health Care, Communication Services
Weak: Financials, Energy, Industrials, Utilities

Moving the Market

-- Rebalancing efforts drove mega-caps/growth stocks higher and suppressed Treasury yields

-- Cyclical/small-cap stocks underperformed

-- Price action lost some steam in the afternoon

WTI crude futures settle little changed
22-Mar-21 15:25 ET
Dow +161.11 at 32789.08, Nasdaq +200.44 at 13415.70, S&P +35.35 at 3948.45

[BRIEFING.COM] The S&P 500 is currently up 0.9% and is trading around the 3950 level.

One last look at the S&P 500 sectors shows eight sectors trading higher while three trading lower. The information technology (+2.1%), consumer discretionary (+1.2%), communication services (+1.2%), and real estate (+1.1%) sectors outperform, while the financials (-1.0%), energy (-0.3%), and utilities (-0.3%) sectors are the lone holdouts today.

WTI crude futures settled little changed at $61.47/bbl.