When I was in the U.S. Air Force, I had a roommate named LV Nelson from Tuscaloosa, Alabama, who always bragged about his town. He’d say: “Man, I know you from New York, but don’t sleep on T- Town.” Yesterday, Wall Street’s version of T-Town got a new member.
It was a strong session for the NASDAQ Composite, which had long enough coattails to bring the S&P higher into the close.
The so-called FAANG + M (MSFT) stocks were fantastic. Facebook (FB) set the stage with a huge legal victory over the Federal Trade Commission (FTC). The stock rallied 4.18% on 27.0 million shares (daily average is 17.7 million) and closed at a new high share price and a market cap of $1.008 trillion.
- Apple: $2.249 trillion
- Amazon: $1.73 trillion
- Google: $1.66 trillion
- Microsoft: $2.02 trillion
To see the chart, click here.
Message of the Market
It’s hard to believe that at one point, only three sectors were positive in the session, which finished with only three sectors in the red. The moves higher weren’t significant, but buyers emerged on the shallow dip points to growing tension for those on the sidelines to get in the mix.
The biggest winners of 2021 gave up big chunks yesterday as sellers rang the register to trot over to the next hot spot.
S&P 500 Index | +0.23% | |
Communication Services XLC | +1.13% | |
Consumer Discretionary XLY | +0.02% | |
Consumer Staples XLP | +0.09% | |
Energy XLE | -3.38% | |
Financials XLF | -0.73% | |
Health Care XLV | +0.15% | |
Industrials XLI | -0.53% | |
Materials XLB | 0.00% | |
Real Estate XLRE | +0.04% | |
Technology XLK | +1.05% | |
Utilities XLU | +0.64% |
Market Breadth
There were more decliners than advancers on the NYSE and NASDAQ Composite. Volume was negative on the NYSE and very light on the NASDAQ.
Market Breadth | NYSE | NASDAQ |
Advancing | 1,387 | 2,109 |
Declining | 1,997 | 2,312 |
52 Week High | 150 | 207 |
52 Week Low | 170 | 32 |
Up Volume | 1.30B | 2.73B |
Down Volume | 2.88B | 1.46B |
Coming in for a Landing
Airlines and cruise ships, and other reopening names were under significant pressure yesterday. I think some of that had to do with the continued surge of the Delta variant of Covid-19. Countries are erecting barriers again, including Hong Kong, blocking air traffic from the UK beginning on Thursday.
Interestingly, the United States is ranked number one on Bloomberg’s Covid Resilience Ranking. I’m worried states, such as California, would take excessively effusive actions, like bringing back lockdowns. I hope that doesn’t happen.
Covid Resilience Ranking
RANK | ECONOMY | BLOOMBERG RESILIENCE SCORE | PEOPLE COVERED BY VACCINES | LOCKDOWN SEVERITY | FLIGHT CAPACITY | VACCINATED TRAVEL ROUTES |
|---|---|---|---|---|---|---|
1 | U.S. | 76 | 50.3% | 47 | -20.1% | 334 |
2 | New Zealand | 73.7 | 10.3% | 22 | -31.3% | 140.5 |
3 | Switzerland | 72.9 | 41% | 48 | -69.9% | 365.5 |
4 | Israel | 72.9 | 59.1% | 22 | -63.7% | 134.5 |
5 | France | 72.8 | 40.3% | 48 | -59.3% | 346.5 |
6 | Spain | 72 | 41.7% | 54 | -54.7% | 365 |
7 | Australia | 70.1 | 14.2% | 50 | -35.3% | 136.5 |
8 | Mainland China | 69.9 | 40.8% | 78 | 1.7% | 121.5 |
9 | U.K. | 68.7 | 57.1% | 51 | -77.8% | 216.5 |
10 | South Korea | 68.6 | 19.2% | 50 | -46.4% | 137 |
11 | Norway | 67.9 | 36.5% | 59 | -59.9% | 133 |
12 | Denmark | 67.5 | 43.2% | 50 | -73.2% | 173.5 |
13 | Singapore | 67 | 44.1% | 58 | -83% | 137 |
14 | Turkey | 66.9 | 28.2% | 63 | -39.2% | 354.5 |
15 | Saudi Arabia | 66.9 | 25.2% | 54 | -44.2% | 349 |
16 | Belgium | 66.4 | 45.3% | 51 | -62.6% | 170.5 |
17 | Finland | 66.1 | 38.1% | 48 | -83.2% | 142.5 |
18 | U.A.E. | 65.8 | 70% | 61 | -59.9% | 253 |
19 | Greece | 65.8 | 36.9% | 45 | -42.9% | 187.5 |
20 | Romania | 65 | 23.2% | 43 | -33.2% | 371 |
U.K. REPORTS 22,868 NEW COVID CASES, MOST SINCE END OF JANUARY
Headlines like this aren’t hitting the market, but it looks like it’s influenced certain sectors.
The yield curve continues its rapid flattening. The spread between the 10- and 2-year bond yields is in freefall. The rise of the Delta variant is one of the reasons for this.
Ahead of the big jobs report, it should be noted the jobs continue to mount. Friday is going to be huge.
Remember how crummy stocks reacted to the greatest earnings season ever? I don’t think that happens again this time around. Yes, comparable (s) are easy, but the absolute numbers are going to be huge. In the meantime, forward price-to-earnings (F P/E) ratios have gone much lower, even as the market has gone much higher.
It’s a couple of weeks away, but this earnings season should be huge.
To see the chart, click here.
Portfolio Approach
We took profits in Consumer Discretionary yesterday in our Hotline Model Portfolio.
Today’s Session
Financials act great ahead of the open, as big banks sans Citigroup (C ) hiked dividend payments and many also increased their buy-back programs.
Banks | New Dividend | Old Dividend |
GS | $2 | $1.25 |
JPM | $1.00 | $0.90 |
BAC | $0.21 | $0.18 |
WFC | $0.20 | $0.10 |
MS | $0.70 | $0.35 |
USB | $0.46 | $0.42 |
STT | $0.57 | $0.52 |
TFC | $0.48 | $0.45 |
C | $0.51 | ---- |
BK | $0.34 | $0.31 |
PNC | $1.25 | $1.15 |
Beyond the banks, it’s a quiet morning.