Sector Investing

[ReturntoSender]

Market Snapshot

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

Dow 32160.74 -84.96 (-0.26%)
Nasdaq 11737.67 +114.42 (0.98%)
SP 500 4001.05 +9.81 (0.25%)
10-yr Note +3/32 2.999
NYSE Adv 1361 Dec 13 Vol 1.2 bln
Nasdaq Adv 1642 Dec 2570 Vol 6.2 bln

Industry Watch
Strong: Information Technology, Communication Services, Health Care, Energy
Weak: Real Estate, Financials, Utilities, Consumer Staples, Industrials

Moving the Market

-- Mega-caps outperform in volatile session

-- 10-yr yield drops below 3.00%

-- M&A activity

-- David Tepper says he covered his short position in Nasdaq and is now a buyer of S&P 500

Mega-caps keep market afloat
10-May-22 16:20 ET
Dow -84.96 at 32160.74, Nasdaq +114.42 at 11737.67, S&P +9.81 at 4001.05

[BRIEFING.COM] The S&P 500 increased 0.3% on Tuesday in a volatile session in which the large growth stocks did the heavy lifting. The Nasdaq Composite pulled ahead with a 1.0% gain, representing the mega-cap outperformance, while the Dow Jones Industrial Average (-0.3%) and Russell 2000 (-0.02%) closed slightly lower.

The session started on a strong note for the market: the S&P 500 rallied as much as 1.9% amid gains across all 11 sectors, ostensibly because the 10-yr yield dropped below 3.00% (-9 bps to 2.99%). The price action in the 10-yr yield, though, was rooted in underlying growth concerns amid news that Shanghai was again tightening COVID-19 restrictions.

By early afternoon, the S&P 500 was down as much as 0.8% as investors sold into the early strength on no specific news catalyst. Selling was relatively indiscriminate apart from the steady gains in the beaten-down mega-caps, which ended up leading the market off session lows and the S&P 500 back above the 4,000 level by the close.

The Vanguard Mega Cap Growth ETF (MGK 193.89, +1.97) advanced 1.0%, whereas the Invesco S&P 500 Equal Weight ETF (RSP 142.51, -0.37) declined 0.3%.

The mega-caps propped up the S&P 500 information technology (+1.6%) and communication services (+0.8%) sectors to the top of the standings, joined by the energy sector (+0.9%). Conversely, the real estate (-2.3%), utilities (-1.2%), and financials (-0.8%) sectors were the worst performers.

The more speculative growth stocks, meanwhile, continued to disappoint, specifically Peloton (PTON 12.90, -1.23, -8.7%), Upstart (UPST 33.61, -43.52, -56.4%), GoodRx (GDRX 7.97, -2.78, -25.9%), and Sofi Technologies (SOFI 5.25, -0.72, -12.1%) following their earnings and/or guidance. Note, SOFI's earnings were released ahead of schedule prior to the close.

Bank stocks, in particular, were pressured by some flattening action in the Treasury market, where the 2s10s spread narrowed by 11 basis points. The 2-yr yield increased two basis points to 2.63%. The SPDR S&P Bank ETF (KBE 46.34, -0.62) fell 1.3%.

In M&A news, Biohaven Pharma (BHVN 140.00, +56.86, +68.4%) agreed to be acquired by Pfizer (PFE 49.49, +0.85, +1.8%) for $11.6 billion, or $148.50 per share, in cash -- a hefty 79% premium over yesterday's closing price. Duke Realty (DRE 49.58, +1.87, +3.9%) received a takeover proposal from Prologis (PLD 125.47, -6.90, -5.2%) for about $24 billion, or $61.68/share, in stock.

WTI crude futures settled just above $100.00 per barrel ($100.02, -3.41, -3.3%). The U.S. Dollar Index increased 0.2% to 103.90.

Tuesday's economic data was limited to NFIB Small Business Optimism, which was unchanged at 93.2 in April. Looking ahead, investors will receive the Consumer Price Index for April, the Treasury Budget for April, and the weekly MBA Mortgage Applications Index on Wednesday.

Dow Jones Industrial Average -11.5% YTD
S&P 500 -16.1% YTD
Russell 2000 -21.5% YTD
Nasdaq Composite -25.0% YTD

Bank stocks clipped by flatter yield curve
10-May-22 15:30 ET
Dow -64.29 at 32181.41, Nasdaq +153.46 at 11776.71, S&P +15.30 at 4006.54

[BRIEFING.COM] The S&P 500 is up 0.4%, and the Russell 2000 is up 0.6%.

One last look at the sectors before the close shows information technology (+2.0%) and communication services (+1.1%) still outperforming with solid gains, thanks to the mega-caps, while the real estate (-2.2%), utilities (-1.6%), and financials (-1.0%) sectors find themselves at the bottom of the standings.

Bank stocks in particular are getting clipped by the curve-flattening activity in the Treasury market. The 2s10s spread has narrowed by nine basis points, predominately due to the drop in the 10-yr yield (-9 bps to 2.99%). The SPDR S&P Bank ETF (KBE 46.16, -0.80) is down 1.7%.

WTI crude futures, meanwhile, settled lower by $3.41 (-3.3%) to $100.02/barrel.
Sofi Technologies disappoints investors with early earnings release
10-May-22 15:00 ET
Dow +19.34 at 32265.04, Nasdaq +198.93 at 11822.18, S&P +29.08 at 4020.32

[BRIEFING.COM] The S&P 500 is up 0.9% in a volatile session in which the benchmark index was up as much as 1.9% in early action and down as much as 0.8%, as investors sold into the early strength.

Earlier today, Sofi Technologies (SOFI 5.43, -0.54, -9.1%) released its earnings report ahead of schedule. SOFI shares are down 9% after the company missed EPS estimates on above-consensus revenue and guided the midpoint of Q2 revenue below consensus. Note, the company did raise its FY22 revenue guidance.

Looking ahead, Coinbase Global (COIN 76.31, -7.14, -8.6%), Roblox (RBLX 23.50, -1.11, -4.4%), and Unity Software (U 48.78, -1.60, -3.1%) are some notable growth companies that will report earnings after the close.
Sysco, Microchip outperform following earnings
10-May-22 14:30 ET
Dow +44.18 at 32289.88, Nasdaq +192.28 at 11815.53, S&P +28.80 at 4020.04

[BRIEFING.COM] The major averages have leveled off in the last half hour, the S&P 500 (+0.72%) firmly in second place.

S&P 500 constituents Fortinet (FTNT 264.69, +19.47, +7.94%), Sysco (SYY 87.61, +6.53, +8.05%), and Microchip (MCHP 68.37, +4.06, +6.31%) pepper the top of today's standings. FTNT outperforms after UK and US intelligence confirmed findings that Russia was behind a cyberattack targeting Viasat in Ukraine before the country invaded, while SYY and MCHP show solid gains in reaction to earnings reports.

Meanwhile, Virginia-based tobacco firm Altria (MO 51.02, -4.24, -7.67%) is today's worst performer following a downgrade to Market Perform at Bernstein.
Gold slips as dollar cozies up to Tuesday advance
10-May-22 14:00 ET
Dow +123.88 at 32369.58, Nasdaq +239.75 at 11863.00, S&P +42.40 at 4033.64

[BRIEFING.COM] The broader market shot higher at the turn of the last half hour, all now in positive territory, as the tech-heavy Nasdaq Composite (+2.06%) continues to hold the lead.

Gold futures settled $15.60 lower (-0.9%) to $1,841.00/oz, pressured in part by a rise in the greenback.

Meanwhile, the U.S. Dollar Index is about +0.2% higher at $103.86.