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Market Snapshot

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

Dow 32196.66 +466.36 (1.47%)
Nasdaq 11805.00 +434.04 (3.82%)
SP 500 4023.89 +93.81 (2.39%)
10-yr Note -29/32 2.929
NYSE Adv 2514 Dec 673 Vol 1.1 bln
Nasdaq Adv 2962 Dec 1215 Vol 5.8 bln

Industry Watch
Strong: Consumer Discretionary, Information Technology, Energy, Real Estate
Weak: Utilities, Health Care

Moving the Market

-- Stocks bounce from oversold condition

-- Renewed buying interest in mega-cap stocks

-- Short-covering activity

-- Positive-sounding COVID news out of China

Overdue rally into week's end
13-May-22 16:20 ET
Dow +466.36 at 32196.66, Nasdaq +434.04 at 11805.00, S&P +93.81 at 4023.89

[BRIEFING.COM] The S&P 500 rallied 2.4% on Friday, bouncing from an oversold condition and closing back above the psychological 4,000 level. The Nasdaq Composite (+3.8%) and Russell 2000 (+3.1%) outperformed with gains over 3.0% while the Dow Jones Industrial Average rose 1.5%.

It was a risk-on day from the get-go, starting from strong showings in foreign equity markets and continuing into the close of U.S. markets. All 11 S&P 500 sectors finished higher with gains ranging from 1.1% (utilities and health care) to 4.1% (consumer discretionary), with individual leadership belonging to the battered mega-cap stocks.

Presumably, risk sentiment was aided by a recognition that the S&P 500 was able to push higher after nearly entering bear market territory yesterday, as well as the ability for the market to sustain an early rally effort.

News factors that supported cause were reports from Bloomberg indicating that Shanghai was aiming to have no community spread of COVID-19 by May 20, spurring hopes for a relaxation of restrictions this month, and that Beijing refuted rumors of potential COVID-related lockdowns. Crude futures rose 3.7%, or $3.92, to $110.32/bbl amid improved demand expectations.

Short-covering activity, meanwhile, was evident in the post-earnings pops in Affirm Holdings (AFRM 23.71, +5.67, +31.4%) and Duolingo (DUOL 89.77, +22.79, +34.0%), and the outsized gain in Robinhood Markets (HOOD 10.69, +2.13, +24.9%) on news that Emergent Fidelity disclosed a 7.6% active stake in the company.

The bullish price action contributed to a 9% decline in the CBOE Volatility Index (28.87, -2.80, -9.1%), reflecting reduced hedging interest, and declines in safe-haven assets like Treasuries, gold ($1,808.30/ozt, -$15.40, +0.8%), and the U.S. dollar (104.57, -0.28, -0.3%).

Selling interest in Treasuries pushed yields higher: the 2-yr yield rose eight basis points to 2.59%, and the 10-yr yield rose 12 basis points to 2.94%.

In Fedspeak, Fed Chair Powell and Cleveland Fed President Mester (FOMC voter) both reiterated support for 50-basis-point rate hikes in the next two meetings after seeing this week's inflation data. On a related note, hopes for peak inflation were reinforced today by a flat m/m change in import prices for April and by downwardly revised export prices for March (to 4.1% from 4.5%).

Separately, Twitter (TWTR 40.70, -4.38, -9.7%) shares fell about 10% amid growing doubts about Elon Musk's takeover of the company. Mr. Musk tweeted that the deal was temporarily on hold following recent analysis that showed spam/fake accounts represented less than 5% of Twitter users -- less than his expectations -- but later said that he was still committed to the deal.

Reviewing Friday's economic data:

The preliminary University of Michigan Index of Consumer Sentiment for May dropped to 59.1 (Briefing.com consensus 63.5) from the final reading of 65.2 for April. In the same period a year ago, the index stood at 82.9.
The key takeaway from the report is that the decline in sentiment was broad-based across income, age, education, geography, and political affiliation with inflation factoring prominently in consumers' assessment of their current financial situation.
Import prices were flat in April after increasing 2.9% in March. Excluding oil, import prices rose 0.4% after increasing 1.2% in March. Export prices rose 0.6% after increasing 4.1% in March. Excluding agriculture, export prices also rose 0.5% after increasing 4.1% in March.

Looking ahead, investors will receive the Empire State Manufacturing Survey for May and Net Long-term TIC Flows for March on Monday.

Dow Jones Industrial Average -11.4 YTD
S&P 500 -15.6% YTD
Russell 2000 -20.2% YTD
Nasdaq Composite -24.5% YTD

Still looking up heading into the close
13-May-22 15:35 ET
Dow +486.90 at 32217.20, Nasdaq +460.26 at 11831.22, S&P +98.11 at 4028.19

[BRIEFING.COM] Heading into the close, the S&P 500 is up 2.5%.

All 11 sectors are up. Consumer discretionary (+4.1%), energy (+3.5%), and information technology (+3.7%) are at the top with utilities (+1.0%) at the tail end. Apple (AAPL 147.4, +4.9, +3.4%) has recouped its loss from yesterday, and NVIDIA (NVDA 177.7, +15.9, +10.1%) is up substantially heading into the close.

Crude oil futures rose $3.92 (+3.7%) to $110.32/barrel, possibly in response to the positive news out of Shanghai and Beijing.
Fed Mester reiterates support for 50-basis-point increases
13-May-22 15:00 ET
Dow +351.92 at 32082.22, Nasdaq +397.56 at 11768.52, S&P +81.23 at 4011.31

[BRIEFING.COM] The S&P 500 is currently up 2.2% and has seen some minor volatility this afternoon. The 4,000 level has become a battleground for the S&P 500, so this will be a level worth watching, particularly on a closing basis, for sentiment reasons.

Earlier today, Cleveland Fed President Mester (FOMC voter) reiterated support for 50-basis-point increases at the next two meetings, echoing recent comments from Fed Chair Powell, St. Louis Fed President Bullard (FOMC voter), and San Francisco Fed President Daly (non-voter) this week.

Looking ahead, Warby Parker (WRBY 17.07, -0.13, -0.8%) and Wix.com (WIX 70.35, +7.07, +11.2%) are some notable companies that will report earnings prior to Monday's open.
Ford outperforms on Morgan Stanley upgrade, Starbucks higher after insider purchase, lockdown easing
13-May-22 14:30 ET
Dow +200.07 at 31930.37, Nasdaq +305.11 at 11676.07, S&P +57.74 at 3987.82

[BRIEFING.COM] The S&P 500 (+1.47%) is firmly in second place to this point on Friday.

S&P 500 constituents Las Vegas Sands (LVS 33.88, +3.74, +12.41%), Ford Motor (F 13.36, +0.92, +7.40%), and Starbucks (SBUX 74.43, +4.53, +6.48%) pepper the top of today's trading. Lockdown easing reports out of China have lifted casino names including LVS, Ford caught an upgrade from Morgan Stanley this morning, while SBUX bounced off April 2020 lows following interim CEO H. Schultz's disclosed stock purchases.

Meanwhile, New Jersey-based medical device company Embecta Corp. (EMBC 25.66, -3.22, -11.15%) is today's top laggard following this morning's Q2 print.
Gold slots worst weekly losses since last June
13-May-22 14:00 ET
Dow +304.49 at 32034.79, Nasdaq +378.31 at 11749.27, S&P +76.01 at 4006.09

[BRIEFING.COM] With about two hours to go on Friday the tech-heavy Nasdaq Composite (+3.33%) holds a healthy lead among its major average counterparts.

Gold futures settled $16.40 lower (-0.9%) to $1,808.20/oz, registering a weekly decline of -4.0%, pressured by this week's gains in the dollar as investors cope with ongoing inflation concerns.

Meanwhile, the U.S. Dollar Index is down about -0.3% to $104.55.