Sector Investing

[ReturntoSender]

Market Snapshot

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

Dow 35819.56 +89.08 (0.25%)
Nasdaq 15498.38 +50.27 (0.33%)
SP 500 4605.38 +8.96 (0.19%)
10-yr Note -23/32 1.597
NYSE Adv 1590 Dec 1684 Vol 1.1 bln
Nasdaq Adv 2276 Dec 2238 Vol 5.2 bln

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

Moving the Market

-- S&P 500, Nasdaq, and Dow close at record highs in resilient, yet defensive, session

-- Apple (AAPL) and Amazon.com (AMZN) decline about 2% following earnings reports

-- The other mega-caps provided offsetting support

-- PCE inflation increased modestly in September, in-line with expectations

Large-cap indices end week at record highs
29-Oct-21 16:20 ET
Dow +89.08 at 35819.56, Nasdaq +50.27 at 15498.38, S&P +8.96 at 4605.38

[BRIEFING.COM] The S&P 500 (+0.2%) and Nasdaq Composite (+0.3%) set intraday and closing record highs on Friday in a resilient, yet defensive, session. The Dow Jones Industrial Average (+0.3%) also closed at a record high with a comparable 0.3% gain, while the Russell 2000 (-0.03%) closed fractionally lower.

The session was resilient in that the S&P 500 recouped an early 0.6% decline while weathering relatively disappointing earnings news from Apple (AAPL 149.81, -2.76, -1.8%) and Amazon.com (AMZN 3372.41, -74.16, -2.2%). Both companies missed revenue estimates and issued cautious outlooks due to persisting supply chain issues.

At the same time, a defensive mindset was manifested by notable strength in the mega-caps not named Apple or Amazon, the outperformance of the S&P 500 health care sector (+1.0%), renewed buying interest in Treasuries, and a 0.8% gain in the U.S. Dollar Index (94.11, +0.77).

The information technology (+0.4%) and communication services (+0.8%) sectors also closed higher, propped up by Microsoft (MSFT 331.62, +7.27, +2.2%), Alphabet (GOOG 2965.41, +42.83, +1.5%), Facebook (FB 323.54, +6.62, +2.1%), NVIDIA (NVDA 255.67, +6.26, +2.5%), and Netflix (NFLX 690.31, +16.26, +2.4%).

The mega-cap gains helped mitigate the negative influence from seven of the 11 S&P 500 sectors. The real estate sector (-1.2%) underperformed and was the only sector that lost more than 1.0%.

Starbucks (SBUX 106.07, -7.13, -6.3%) was another earnings loser with a 6% decline, while Dow component Chevron (CVX 114.49, +1.37, +1.2%) gained 1% after beating top and bottom-line estimates.

Treasuries saw increased demand despite the PCE Price Index being up 4.4% yr/yr in September, versus 4.2% in August. To be fair, the 0.3% m/m increase was in-line with expectations, as was the 0.2% m/m increase in the core-PCE Price Index. The latter was up 3.6% yr/yr for the fourth straight month, which supported the narrative that inflation rates could be peaking.

The 10-yr yield decreased one basis point to 1.56% after flirting with 1.63% in the wake of the PCE data. The 2-yr yield decreased one basis point to 0.49% after flirting with 0.56% intraday. WTI crude futures rose 0.9%, or $0.73, to $83.52/bbl.

Separately, the FDA authorized the Pfizer (PFE 43.74, +0.56, +1.3%)-BioNTech (BNTX 278.96, -5.02, -1.8%) COVID-19 vaccine for emergency use in children 5-11 years of age. This was the expected outcome after an FDA Advisory panel recommended the vaccine for this age group earlier this week.

Reviewing Friday's economic data:

Personal income declined 1.0% month-over-month in September (Briefing.com consensus -0.2%) with the expiration of unemployment benefits and decreases in general in government social benefits. Personal spending was up 0.6% month-over-month (Briefing.com consensus +0.4%). The PCE Price Index increased 0.3% month-over-month, as expected, and the core-PCE Price Index increased 0.2%, also in-line with estimates. On a year-over-year basis, the PCE Price Index was up 4.4%, versus 4.2% in August, and the core-PCE Price Index was up 3.6% for the fourth straight month, exuding some stickiness in inflation pressures.
The key takeaway from the report was the stickiness in inflation pressures and the recognition that the drop in income prompted consumers to spend out of savings to meet their needs and wants. The personal savings rate as a percentage of disposable personal income fell to 7.5% from 9.2%.
The final October University of Michigan Index of Consumer Sentiment increased to 71.7 (Briefing.com consensus 71.4) from the preliminary reading of 71.4. The final reading for September was 72.8.
The key takeaway from the report is the disclosure that consumers feel the most uncertainty about the year-ahead inflation rate than anytime in nearly 40 years.
The Q3 Employment Cost Index was up 1.3% (Briefing.com consensus +0.8%) following a 0.7% increase in the second quarter. Wages and salaries, which account for about 70% of compensation costs, increased 1.5%, while benefit costs, which make up the remainder of compensation costs, increased 0.9%.
The key takeaway from the report is that wages and salaries for workers were up from the same period a year ago, yet those gains have increasingly been subsumed by inflation, evidenced by the 5.3% increase in the PCE Price Index seen in the advance Q3 GDP report.
The Chicago PMI increased to 68.4 in October (Briefing.com consensus 63.1) from 64.7 in September.

Looking ahead, investors will receive the ISM Manufacturing Index for October, Construction Spending for September, and the final IHS Markit Manufacturing PMI for October on Monday.

S&P 500 +22.6% YTD
Nasdaq Composite +20.3% YTD
Dow Jones Industrial Average +17.0% YTD
Russell 2000 +16.3% YTD

FDA approves Pfizer Covid vaccine for 5-11 year-olds
29-Oct-21 15:30 ET
Dow -1.07 at 35729.41, Nasdaq -5.32 at 15442.79, S&P -4.90 at 4591.52

[BRIEFING.COM] The S&P 500 is down 0.1% and is seeing a loss of price momentum from earlier today.

A short time ago, the FDA authorized the Pfizer (PFE 43.50, +0.33, +0.8%)-BioNTech (BNTX 278.11, -5.87, -2.0%) COVID-19 vaccine for emergency use in children 5 through 11 years of age. This was the expected outcome after an FDA advisory panel recommended the vaccine earlier this week.

WTI crude futures, meanwhile, settled higher by 0.9%, or $0.73, to $83.52/bbl.