Sector Investing

[ReturntoSender]

Market Snapshot

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

Dow 36236.47 -170.64 (-0.47%)
Nasdaq 15080.86 -19.31 (-0.13%)
SP 500 4696.05 -4.53 (-0.10%)
10-yr Note -24/32 1.729
NYSE Adv 1823 Dec 1453 Vol 912.7 mln
Nasdaq Adv 2155 Dec 2359 Vol 4.7 bln

Industry Watch
Strong: Energy, Financials, Industrials
Weak: Health Care, Materials, Utilities

Moving the Market

-- Lack of conviction drives underwhelming session as Treasury yields continue to edge higher

-- S&P 500 finds technical support at 50-day moving average (4672)

-- Growth stocks pare intraday losses while value stocks outperform

Large-cap indices underwhelm as tech sector remains weak
06-Jan-22 16:20 ET
Dow -170.64 at 36236.47, Nasdaq -19.31 at 15080.86, S&P -4.53 at 4696.05

[BRIEFING.COM] The stock market closed mixed on Thursday in an underwhelming effort following yesterday's retreat. The S&P 500 and Nasdaq Composite both declined 0.1%, and the Dow Jones Industrial Average declined 0.5%. The small-cap Russell 2000, however, advanced 0.6%.

There was a bit of a growth-stock scare in the morning, as the 10-yr yield hit 1.75% and the Nasdaq declined as much as 1.2% after the open. Fortunately, the 10-yr yield stabilized, and investors presumably felt comfortable enough to buy beleaguered growth stocks, especially after the S&P 500 bounced off its 50-day moving average (4672).

Buying conviction was kept in check, though, partly because of anxiety surrounding monetary policy normalization, the upwards path in interest rates, and the possibility for more selling in the days to come. There might also have been a wait-and-see mindset for the December employment report tomorrow.

Five of the 11 S&P 500 sectors ended the session in positive territory while six sectors closed lower. The materials (-1.2%), health care (-1.2%), and utilities (-1.1%) sectors declined more than 1.0% while the information technology sector declined 0.5%.

The heavily-weighted technology sector held back the S&P 500 in a meaningful way considering the Invesco S&P 500 Equal Weight Index (RSP 162.03, +0.36) gained 0.2%. The biggest gainers were found in the financials (+1.6%) and energy (+2.3%) sectors, which extended their weekly gains to 4% and 9%, respectively.

While growth stocks pared intraday losses, there was still there was a lingering preference for value stocks. This preference was better represented by the 0.3% gain in the Russell 3000 Index, versus the 0.2% decline in the Russell 3000 Growth Index.

Walgreens Boots Alliance (WBA 52.44, -1.56, -2.9%) was a value-oriented stock that underperformed despite reporting better-than-expected earnings results and raising its FY22 EPS guidance. Shares of the Dow component fell 3% after being up 0.9% intraday.

Recapping the moves in the Treasury market, the 10-yr yield settled three basis points higher at 1.73% while the 2-yr yield rose six basis points to 0.88% amid expectations for a more aggressive Fed. The U.S. Dollar Index increased 0.1% to 96.30. WTI crude futures rose 2.0%, or $1.58, to $79.40/bbl after briefly topping $80.00/bbl.

Reviewing Thursday's economic data:

Initial claims for the week ending January 1 increased by 7,000 to 207,000 (Briefing.com consensus 198,000) and continuing claims for the week ending December 25 increased by 36,000 to 1.754 million.
The key takeaway is that the latest data didn't disrupt the idea that the labor market is tight and that initial claims are running at pre-pandemic levels, which at the time were thought to be quite low.
The ISM Non-Manufacturing Index for December decreased to 62.0% (Briefing.com consensus 67.1%) from a record high 69.1% in November. The dividing line between expansion and contraction is 50.0%. The December reading marks the 19th straight month of growth for the services sector.
The key takeaway from the report is that it isn't surprising to see some softening following a record-high print and the arrival of the Omicron variant; however, the uptick in the prices index is a worrisome inflation point given the narrative that consumers will be engaging more with services companies in 2022 than they did in 2021.
The trade deficit for November widened to $80.2 billion (Briefing.com consensus -$69.4 billion) from $67.2 billion in October. Exports were $0.4 billion higher than October exports and imports were $13.4 billion more than October imports.
The key takeaway relates to the soft growth in exports, which reflects relatively weak demand abroad before the Omicron variant made its presence felt.
Factory orders for manufactured goods increased 1.6% m/m in November (Briefing.com consensus 1.2%) following an upwardly revised 1.2% increase (from 1.0%) in October. Shipments of manufactured goods jumped 0.7% after increasing 2.0% in October.
The key takeaway from the report is the lack of order growth for nondefense capital goods, excluding aircraft -- a proxy for business spending. That connotes a slowdown, but to be fair, it follows a string of monthly increases, so it appears at this juncture to be some natural slowing after an extended period of strength.

Looking ahead, investors will receive the Employment Situation Report for December and Consumer Credit for November on Friday.

Dow Jones Industrial Average -0.3% YTD
S&P 500 -1.5% YTD
Russell 2000 -1.7% YTD
Nasdaq Composite -3.6% YTD

Crude futures briefly top $80 per barrel
06-Jan-22 15:30 ET
Dow -107.43 at 36299.68, Nasdaq +22.05 at 15122.22, S&P +5.55 at 4706.13

[BRIEFING.COM] The S&P 500 is up just 0.1% as buyers struggle to follow through from early-mornin