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End of Day Brief - Tuesday July 27 - Markets down on virus fear

SP 5004401.46-20.84(-0.47%)
10-yr Note +6/321.239
NYSEAdv 1163 Dec 2061 Vol 881.1 mln
NasdaqAdv 1218 Dec 2089 Vol 4.3 bln

Industry Watch

Strong: Utilities, Real Estate, Health Care, Consumer Staples
Weak: Information Technology, Consumer Discretionary, Communication Services, Energy

Moving the Market

-- Mega-caps looked like small-caps (in a bad way) ahead of earnings reports

-- Profit-taking interest, then some dip-buying efforts

-- Growth concerns

Stocks down on Covid fears

Dow -85.79 at 35058.52, Nasdaq -180.14 at 14660.56, S&P -20.84 at 4401.46

[BRIEFING.COM] The S&P 500 lost 0.5% on Tuesday, snapping a five-session winning streak along with the Dow Jones Industrial Average (-0.2%) and Nasdaq Composite (-1.2%). The mega-caps were responsible for the underperformance of the Nasdaq and looked like the small-caps in the Russell 2000 (-1.1%) from a performance standpoint.

Buyers looked nervous in front of Apple's ($AAPL 146.77, -2.22, -1.5%), Microsoft's ($MSFT 286.54, -2.51, -0.9%), and Alphabet's ($GOOG 2735.93, -56.96, -2.0%) earnings reports after the close given the disappointing reaction in Tesla ($TSLA 644.78, -12.84, -2.0%) following its better-than-expected Q2 results.

It could have been worse, though, since the major indices were down between 0.8% (Dow) and 2.3% (Nasdaq) at their intraday lows. Profit-taking interest gave way to some dip-buying efforts in the afternoon. Six of the 11 S&P 500 sectors closed higher while five closed lower.

The consumer discretionary (-1.2%), communication services (-1.1%), information technology (-1.0%), and energy (-1.0%) sectors each declined about 1.0%. The defensive-oriented utilities (+1.7%), real estate (+0.8%), and health care (+0.4%) sectors were the top performers.

Another factor in the mix reportedly included growth concerns as investors received mixed economic data and the CDC recommended everyone wear masks indoors in COVID-19 hot spots. Total durable goods orders for June increased by only 0.8% m/m ( consensus +2.1%) while the Conference Board's consumer confidence report for July was better than expected.

The growth-sensitive 10-yr yield decreased four basis points to 1.23% amid increased buying interest while the fed-sensitive 2-yr yield was unchanged at 0.20% ahead of the FOMC policy statement tomorrow. The U.S. Dollar Index decreased 0.2% to 92.46. The CBOE Volatility Index (19.36, +1.78, +10.1%) briefly jumped above 20.00.

Separately, the industrials sector (-0.5%) included mixed earnings reactions in UPS ($UPS 195.19, -14.67, -7.0%), 3M ($MMM 200.47, -1.20, -0.6%), General Electric ($GE 13.08, +0.16, +1.2%), and Raytheon Technologies ($RTX 88.22, +2.27, +2.6%). UPS shares dropped 7%.

WTI crude futures settled lower by 0.4%, or $0.29, to $71.68/BBL.

Reviewing Tuesday's economic data:

  • The Conference Board's Consumer Confidence Index checked in at 129.1 in July ( consensus 124.5) versus an upwardly revised 128.9 (from 127.3) in June. The July reading marked the highest level for the index since February 2020.
    • The key takeaway from the report is the understanding that consumer spending activity is expected to remain robust in the short-term, evidenced by a larger percentage of consumers saying they plan to buy homes, automobiles, and major appliances in the coming months.
  • Total durable goods orders for June were up 0.8% month-over-month ( consensus 2.1%) following an upwardly revised 3.2% increase (from 2.3%) for May. Orders, excluding transportation, rose 0.3% month-over-month ( consensus 0.9%) on the heels of an upwardly revised 0.5% increase (from 0.3%) for May. The upward revisions to the May data mitigated some of the headline disappointment for June.
    • The key takeaway from the report is that business spending continues to increase. New orders for nondefense capital goods, excluding aircraft -- a proxy for business spending -- increased 0.5% month-over-month for the second consecutive month.
  • The May S&P Case-Shiller Home Price Index increased 17.0% yr/yr ( consensus 15.2%) following a revised 15.0% increase (from 14.9%) in April.
  • The FHFA Housing Price Index increased 1.7% m/m in May following an unrevised 1.8% increase in April.

Looking ahead, investors will receive the FOMC Rate decision, the weekly MBA Mortgage Applications Index, and the Advance International Trade in Goods, Retail Inventories, and Wholesale Inventories reports for June on Wednesday.

  • S&P 500 +17.2% YTD
  • Nasdaq Composite +13.8% YTD
  • Dow Jones Industrial Average +14.6% YTD
  • Russell 2000 +11.0% YTD

Source: (

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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