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End of Day Brief - Monday Nov 22 - Markets start week down

Dow35619.25+17.27(0.05%)
Nasdaq15854.77-202.68(-1.26%)
SP 5004682.94-15.02(-0.32%)
10-yr Note -27/321.601
NYSEAdv 1485 Dec 1841 Vol 943.9 mln
NasdaqAdv 1648 Dec 2976 Vol 5.4 bln


Industry Watch

Strong: Energy, Financials, Consumer Staples, Utilities
Weak: Communication Services, Information Technology, Consumer Discretionary


Moving the Market

-- President Biden to nominate Fed Chair Powell for a second term and Lael Brainard as Vice Chair

-- Market fades renomination rally into the close amid weakness in the large growth stocks

-- Strength in financial and energy stocks amid higher Treasury yields and oil prices


Market fades Powell renomination rally

Dow +17.27 at 35619.25, Nasdaq -202.68 at 15854.77, S&P -15.02 at 4682.94

[BRIEFING.COM] The S&P 500 advanced as much as 1.0% on Monday after President Biden announced he will nominate Jerome Powell for a second term as Fed Chair and nominate Lael Brainard for Vice Chair of the Board of Governors. The benchmark index hit a record high but ended the session with a 0.3% decline amid a wave of selling interest into the close.

Selling interest was concentrated in the large growths, which disproportionately affected the Nasdaq Composite (-1.3%) after it also tagged a record high with an early 1.0% gain. The Russell 2000 fell 0.5%, while the Dow Jones Industrial Average (+0.1%) eked out a gain.

Early on, the market was presumably relieved to hear of Fed Chair Powell's renomination because he was the consensus candidate, maintaining an order of continuity with an easier confirmation process, too. Moreover, Ms. Brainard not being named Vice Chair for Supervision was well-received in the banking sector, as she was mentioned as someone who would espouse stricter regulation.

Accordingly, the S&P 500 financials sector (+1.4%) was an influential leader, further supported by higher Treasury yields. The energy sector (+1.8%) was the top performer, though, rising 1.8% amid a modest rebound in oil prices ($79.77/BBL, +0.66, +0.9%).

Influential weakness came from the mega-caps within the information technology (-1.1%), communication services (-1.2%), and consumer discretionary (-0.5%) sectors, as investors took profits in a rotation-minded trade. The Vanguard Mega Cap Growth ETF ($MGK 260.55, -3.28) fell 1.2% after rising 2.2% last week.

The 10-yr yield rose nine basis points to 1.63%, which was also blamed for the growth-stock weakness, although the rise wasn't a hindrance early in the day as the Nasdaq was rallying to record highs. Nevertheless, the sustained rise in long-term rates was still conducive for the rotation into value stocks.

Interestingly, the 2-yr yield jumped six basis points to 1.57%, signaling increased expectations for the Fed to speed up its tapering plan and possibly hike rates sooner than expected. A weak $58 billion 2-yr note auction might have also contributed to the selling interest. The U.S. Dollar Index rose 0.5% to 96.53.


Reviewing Monday's economic data:

  • Existing home sales increased 0.8% m/m in October to a seasonally adjusted annual rate of 6.34 million (Briefing.com consensus 6.20 million). Total sales in October were down 5.8% from a year ago.
    • The key takeaway from the report is that prices remain high as inventory remains tight, crimping sales growth in the existing home market as affordability pressures build for prospective buyers.

Looking ahead, investors will receive the preliminary IHS Markit Manufacturing and Services PMIs for November on Tuesday.

  • S&P 500 +24.7% YTD
  • Nasdaq Composite +23.0% YTD
  • Russell 2000 +23.0% YTD
  • Dow Jones Industrial Average +16.4% YTD

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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