Sector Investing

[ReturntoSender]

Market cools down after Coinbase direct listing
14-Apr-21 16:20 ET
Dow +53.62 at 33730.89, Nasdaq -138.26 at 13857.87, S&P -16.93 at 4124.66

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

[BRIEFING.COM] The S&P 500 declined 0.4% on Wednesday, as investors appeared to take profits in the heavily-weighted growth stocks amid the highly-anticipated public debut of Coinbase (COIN 328.28, -52.72, -13.8%). The benchmark index, however, started the day slightly higher in record territory following Q1 earnings reports from several of the big banks.

The Nasdaq Composite underperformed with a 1.0% decline. The Dow Jones Industrial Average (+0.2%) and Russell 2000 (+0.8%), which are more exposed to reopening stocks, outperformed in positive territory but closed off session highs. Like the S&P 500, the Dow set an intraday all-time high.

To start, JPMorgan Chase (JPM 151.21, -2.88, -1.9%), Goldman Sachs (GS 335.35, +7.67, +2.3%), and Wells Fargo (WFC 42.03, +2.24, +5.6%) each beat top and bottom-line estimates and provided encouraging commentary about business/economic conditions. GS and WFC rallied on the news, but JPM went the other way, as some questioned the quality of its EPS beat due to its large release for loan loss reserves.

The overall tone of their reports was well-received by other banks and reopening stocks within the S&P 500 financials (+0.7%), energy (+2.9%), materials (+0.7%), and industrials (+0.1%) sectors. Energy stocks got an added boost from a 5% gain in crude prices ($63.18, +3.00, +5.0%) amid bullish inventory data from the EIA.

While the reopening trade was back on to begin the day, the mega-cap/growth/technology stocks never got going. The information technology (-1.2%), consumer discretionary (-1.2%), and communication services (-0.9%) sectors, where the recently-hot mega-caps reside, were the weakest performers.

Buying interest in growth stocks was lacking prior to the Coinbase open, which was preceded by a lot of excitement from analysts and the media; sellers followed through in response to the disappointing intraday price action in COIN. Coinbase opened at $381/share after earning a reference price of $250, but shares ended the session 14% off the opening price.

The Fed's Beige Book for April, which was released at 2:00 p.m. ET or about 35 minutes after the Coinbase open, was another reported catalyst during the afternoon. Many Districts reported moderate price increases, and some said prices rose more robustly, although any inflation concerns weren't manifested in the Treasury market, which strengthened a bit in response.

The 10-yr yield settled the session two basis points higher at 1.64% after trading slightly higher prior to the Beige Book's release. The 2-yr yield decreased one basis to 0.15%. The U.S. Dollar Index decreased 0.2% to 91.64.

Separately, Fed Chair Powell told the Economic Club of Washington that the Fed is likely to first taper asset purchases after substantial progress on its goals has been reached, then hold its balance sheet constant for a while, and then finally start to gradually raise interest rates -- a similar approach as it did coming out of the financial crisis.

Reviewing Wednesday's economic data:

Import prices increased 1.2% in March while import prices excluding oil increased 0.8%. Export prices increased 2.1% in March while export prices excluding agriculture increased 2.0%.
The MBA Mortgage Applications Index decreased 3.7% following a 5.1% decline in the prior week.

Looking ahead to Thursday, investors will receive the Retail Sales report for March, Industrial Production and Capacity Utilization for March, the weekly Initial and Continuing Claims report, the Philadelphia Fed Index for April, the Empire State Manufacturing Survey for April, the NAHB Housing Market Index for April, Business Inventories for February, and Net Long-Term TIC Flows for February.

Russell 2000 +13.8% YTD
Dow Jones Industrial Average +10.2% YTD
S&P 500 +9.8% YTD
Nasdaq Composite +7.5% YTD

Crude futures rally 5%
14-Apr-21 15:30 ET
Dow +97.74 at 33775.01, Nasdaq -104.37 at 13891.76, S&P -10.87 at 4130.72

[BRIEFING.COM] The S&P 500 is down 0.3%, while the Russell 2000 continues to outperform with a 0.7% gain amid a modest return of the reopening trade.

One last look at the S&P 500 sectors shows energy (+2.6%), financials (+0.7%), materials (+0.7%), and industrials (+0.3%) trading higher, with energy way out in the lead due to the increase in oil prices. The information technology (-0.9%), communication services (-0.8%), and consumer discretionary (-0.9%) sectors, however, are largely responsible for the decline in the S&P 500 right now.

WTI crude futures settled higher by a sharp 5.0%, or $3.00, to $63.18/bbl amid bullish inventory data out of the EIA.