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Market Snapshot

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

Dow 35499.85 +14.88 (0.04%)
Nasdaq 14816.25 +51.13 (0.35%)
SP 500 4460.83 +13.13 (0.30%)
10-yr Note -22/32 1.369
NYSE Adv 1474 Dec 1749 Vol 696.3 mln
Nasdaq Adv 1779 Dec 2533 Vol 3.9 bln

Industry Watch
Strong: Information Technology, Health Care
Weak: Energy, Materials, Industrials, Consumer Staples

Moving the Market

-- S&P 500 and Dow eke out intraday and closing record highs

-- Apple (AAPL) and Microsoft (MSFT) provided key leadership

-- PPI data for July was worse than feared

-- Weakness in semiconductor space after Micron (MU) received analyst downgrade

Market overlooks hot PPI data and gets a hand from the mega-caps
12-Aug-21 16:20 ET
Dow +14.88 at 35499.85, Nasdaq +51.13 at 14816.25, S&P +13.13 at 4460.83

[BRIEFING.COM] The S&P 500 (+0.3%) and Dow Jones Industrial Average (+0.04%) eked out another pair of intraday and closing record highs on Thursday. They were both down 0.3-0.4% in the morning following a Producer Price Index report for July that was worse than feared.

The Nasdaq Composite increased 0.4% as some money rotated back into large growth stocks, while the Russell 2000 (-0.3%) closed slightly lower.

Prior to the open, the Producer Price Index for final demand and the index for final demand, less food and energy, both increased 1.0% month-over month. The Briefing.com consensus was expecting 0.5% increases for both indices. On a year-over-year basis, they were running uncomfortably hot at 7.8% and 6.2%, respectively.

The higher prices for producers weren't an issue that seemed to worry the Treasury market, and in effect, the stock market due to a belief that inflation rates are peaking. The 10-yr yield increased three basis points to 1.37% after trading at 1.36% prior to the report. It's worth noting that initial and continuing claims both improved from the prior weeks.

Granted, there were more declining issues than advancing issues at the NYSE and Nasdaq, but what really mattered for the major indices was that the mega-cap stocks pulled their weight. Apple (AAPL 148.89, +3.03, +2.1%) and Microsoft (MSFT 289.81, +2.86, +1.0%) rose 2% and 1%, respectively, on no specific news.

The health care sector (+0.8%) was the best-performing sector, though, as weakness in the semiconductor stocks held back the information technology sector (+0.6%). The Philadelphia Semiconductor Index fell 1.1%. The energy (-0.5%), industrials (-0.2%), and materials (-0.2%) sectors also closed lower after outperforming the past two days.

The semiconductor space was pressured by weakness in Micron (MU 70.25, -4.78, -6.4%) after the stock was downgraded to Equal-Weight from Overweight at Morgan Stanley. The firm observed that DRAM conditions are losing steam.

Recapping some other moves, the 2-yr yield increased one basis point to 0.22%, the U.S. Dollar Index increased 0.1% to 92.99, and WTI crude futures decreased 0.2%, or $0.16, to $69.11/bbl. On a related note, the IEA cut its 2021 global oil demand forecast due to the spread of the Delta variant.

Reviewing Thursday's economic data:

The Producer Price Index for final demand increased 1.0% month-over-month in July (Briefing.com consensus 0.5%) on the heels of a 1.0% increase in June. The index for final demand, less foods and energy, also increased 1.0% month-over-month (Briefing.com consensus 0.5%), matching a similar increase in June. On a year-over-year basis, the Producer Price Index for final demand was up 7.8% on an unadjusted basis, versus 7.3% in June. That is the largest advance since it was first calculated in November 2010. The index for final demand, less foods and energy, was up 6.2% versus 5.6% in June.
The key takeaway from the report is that producers are clearly paying higher prices, which could translate into profit margin pressure if they are not successful in passing through price increases to customers that offset their higher costs.
Initial claims for the week ending August 7 decreased by 12,000 to 375,000 (Briefing.com consensus 383,000) while continuing claims for the week ending July 31 decreased by 114,000 to 2.866 million.
The key takeaway from this report is the decrease in both initial claims and continuing claims, as that is on point with an improving economy that is in need of more workers to fill open positions.

Looking ahead, investors will receive the preliminary University of Michigan Index of Consumer Sentiment for August and Export/Import Prices for July on Friday.

S&P 500 +18.8% YTD
Dow Jones Industrial Average +16.0% YTD
Nasdaq Composite +15.0% YTD
Russell 2000 +13.7% YTD

Crude futures settle lower
12-Aug-21 15:25 ET
Dow -6.66 at 35478.31, Nasdaq +48.37 at 14813.49, S&P +11.82 at 4459.52

[BRIEFING.COM] The S&P 500 is up 0.3% and on track to close at a record high. The Dow trades flat and any positive finish would be good for a record close.

One last look at the sector standings shows health care (+0.8%) and information technology (+0.6%) leading the advance, while the energy (-0.6%) and industrials (-0.3%) sectors underperform in the red.

WTI crude futures settled lower by 0.2%, or $0.16, to $69.11/bbl. On a related note, the IEA cut its 2021 global oil demand forecast due to the spread of the Delta variant.