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Markets gains on cyclical leadership and technical support

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ReturntoSender Member Level  Thursday, 03/25/21 04:28:47 PM
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Markets gains on cyclical leadership and technical support
25-Mar-21 16:20 ET
Dow +199.42 at 32619.48, Nasdaq +15.79 at 12977.70, S&P +20.38 at 3909.52


[BRIEFING.COM] The S&P 500 increased 0.5% on Thursday amid cyclical leadership and technical support. The benchmark index briefly slipped below its 50-day moving average (3871) with an early 0.9% decline, but investors stepped in faithfully to buy the dip. The Nasdaq Composite (+0.1%) and Dow Jones Industrial Average (+0.6%) also reclaimed early losses and some.

The Russell 2000 rose 2.3% after finding support at the 2100 level, which represented an 8% decline in just over three sessions. Presumably, this was a short-term oversold condition that was primed for a bounce.

A pro-cyclical trade emerged during the day, as the industrials (+1.6%), financials (+1.6%), and materials (+1.4%) sectors paced the rebound effort on no specific news catalysts. The energy sector (+0.3%) overcame an early 3.3% decline, even as oil prices ($58.52/bbl, -2.61, -4.3%) fell 4% despite reports that the Suez Canal could be blocked for weeks.

The communication services (-0.3%) and information technology (-0.1%) sectors stymied the broader advance with modest declines.

There was a lot of news today, but the developments didn't necessarily explain today's action given the market's fickle performance. End-of-quarter rebalancing machinations could have played an underlying role.

Highlighting a few of the stories, President Biden said he will announce an infrastructure plan next week (reportedly with a price tag of up to $4 trillion), weekly initial claims declined by 97,000 to 684,000 (Briefing.com consensus 710,000) for its lowest level since last March, and a congressional hearing on Section 230 matters was still in session by the close.

Individual movers included Nike (NKE 128.64, -4.52, -3.4%), which fell 3% amid Chinese criticism on social media in response to the company's statement on the Xinjiang region, and Boeing (BA 247.19, +7.95, +3.3%) on news the company may begin delivering 787 Dreamliners this week. GameStop (GME 183.75, +63.41, +52.7%) soared 50% following yesterday's 34% post-earnings drop.

U.S. Treasuries finished mixed and little changed. The 10-yr yield was unchanged at 1.61% after trading slightly lower amid the negative start in equities, while the 2-yr yield decreased one basis point to 0.13%. The U.S. Dollar Index increased 0.4% to 92.87.

Reviewing Thursday's economic data:

Initial jobless claims for the week ending March 20 declined by 97,000 to 684,000 (Briefing.com consensus 710,000). Continuing claims for the week ending March 13 decreased by 264,000 to 3.870 million.
The key takeaway from this report is that initial claims are the lowest they have been since March 14, 2020. Granted initial claims are still high, yet the directional movement fits the bill of an improving economy that requires increased hiring activity and reduced layoff activity.
The third estimate for Q4 GDP was revised up to 4.3% (Briefing.com consensus 4.1%) from 4.1% while the GDP Price Deflator was revised down to 2.0% (Briefing.com consensus 2.1%) from 2.1%.
The key takeaway from this report is that it is dated (the first quarter is only days from being over) and shouldn't have any market impact.

Looking ahead, investors will receive Personal Income and Spending for February, PCE Prices for February, the final Univ. of Michigan Index of Consumer Sentiment for March, and the Advance reports for International Trade in Goods, Retail Inventories, and Wholesale Inventories on Friday.

Russell 2000 +10.6% YTD
Dow Jones Industrial Average +6.6% YTD
S&P 500 +4.1% YTD
Nasdaq Composite +0.7% YTD

WTI crude futures settle lower by 4%
25-Mar-21 15:30 ET
Dow +182.10 at 32602.16, Nasdaq +14.33 at 12976.24, S&P +18.85 at 3907.99

[BRIEFING.COM] The S&P 500 is trading near session highs with a 0.4% gain.

One last look at the S&P 500 sectors shows industrials (+1.5%), financials (+1.4%), and materials (+1.4%) leading the advance with gains over 1.0%, while the energy (-0.2%) and communication services (-0.2%) sectors trade slightly lower.

WTI crude futures settled lower by 4.3%, or $2.61, to $58.52/bbl despite reports that traffic is growing in the Suez Canal due to the ship blockage. Presumably, this would hinder supply, which would be bullish on a short-term basis if demand is unchanged. Note, crude futures rose 6% yesterday.

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