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End of Day Briefing - Wednesday Feb 12, 2020

Stock market extends rally to new highs
12-Feb-20
Dow +275.08 at 29551.33, Nasdaq +87.02 at 9725.98, S&P +21.70 at 3379.45

[BRIEFING.COM] The S&P 500 (+0.7%), Dow Jones Industrial Average (+0.9%), and Nasdaq Composite (+0.9%) extended their winning ways on Wednesday and closed at new record highs. The Russell 2000 kept pace with a 0.7% gain.

The narratives driving stocks higher remained unchanged. Reports continued to indicate the slowing pace of the coronavirus, Fed Chair Powell's congressional testimony assured investors that monetary policy will remain favorable, and the positive bias in stocks (including foreign ones) continued to fuel risk sentiment. 

Ten of the 11 S&P 500 sectors contributed to the advance with the energy (+1.4%) and information technology (+1.1%) sectors taking the top spots today. Energy stocks received extra support from a 2.3% gain in WTI crude ($51.17/BBL, +1.16). The consumer staples sector (-0.04%) sat this one out with a marginal loss. 

Apple ($AAPL 327.20, +7.59, +2.4%) remained an influential force in the market, while smaller companies Micron ($MU 59.27, +2.02, +3.5%), Las Vegas Sands ($LVS 71.13, +2.28, +3.3%), and Wynn Resorts ($WYNN 136.82, +4.83, +3.7%) benefited from analyst upgrades. Bank of America/Merrill Lynch liked the risk-reward ratios for LVS and WYNN given the improving coronavirus situation. 

On the downside, shares of Lyft ($LYFT 48.46, -5.48, -10.2%), Western Union ($WU 26.13, -2.11, -7.5%), and Bed Bath & Beyond ($BBBY 11.79, -3.06, -20.6%) were among today's biggest laggards in response to earnings results. 

U.S. Treasuries remained out of favor amid the bullish bias in stocks. The 2-yr yield increased two basis points to 1.44%, and the 10-yr yield increased four basis points to 1.63%. The U.S. Dollar Index remained strong, closing 0.3% higher at 99.00. 

Separately, the CBOE Volatility Index fell 9.5% to 13.74, returning to levels seen before the coronavirus started to hit stocks last month. 

Reviewing Wednesday's economic data:

  • The Treasury Budget for January showed a deficit of $32.6 billion versus a surplus of $8.7 billion in the same period a year ago. This budget data is not seasonally adjusted, so the January deficit cannot be compared to the deficit of $13.3 billion for December.
    • The budget deficit over the last 12 months is $1.063 trillion versus $1.022 trillion in December. The fiscal year-to-date deficit is $389.2 billion versus $310.3 for the same period a year ago.
  • The weekly MBA Mortgage Applications Index increased 1.1% following a 5.0% increase in the prior week.

Looking ahead, investors will receive the Consumer Price Index for January and the weekly Initial and Continuing Claims report on Thursday.

  • Nasdaq Composite +8.4% YTD
  • S&P 500 +4.6% YTD
  • Dow Jones Industrial Average +3.6% YTD
  • Russell 2000 +1.3% YTD

Market Snapshot

Dow29551.33+275.08(0.94%)
Nasdaq9725.98+87.02(0.90%)
SP 5003379.45+21.70(0.65%)
10-yr Note -2/321.632
NYSEAdv 1744 Dec 1147 Vol 929.2 mln
NasdaqAdv 1924 Dec 1250 Vol 2.3 bln

Industry Watch

Strong: Energy, Information Technology
Weak: Consumer Staples

Moving the Market

-- Stock market extends rally to new highs in mostly broad-based advance

-- Positive views regarding the coronavirus, the economy, and monetary policy

-- Defensive-oriented stocks underperformed


Source: (Briefing.com)

Disclosure: I may trade in the ticker symbols mentioned, both long or short. My articles represent my personal opinion and analysis and should not be taken as investment advice. Readers should do their own research before making decisions to buy or sell securities. Trading and investing include risks, including loss of principal.

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