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End of Day Brief - Tuesday Mar. 30 - Stocks end a bit lower

Market Snapshot

SP 5003958.55-12.54(-0.32%)
10-yr Note -2/321.738
NYSEAdv 2045 Dec 1188 Vol 883.3 mln
NasdaqAdv 2415 Dec 1606 Vol 4.6 bln

Industry Watch

Strong: Financials, Industrials, Consumer Discretionary
Weak: Information Technology, Consumer Staples, Utilities, Health Care

Moving the Market

-- Large-cap indices close slightly lower, while Russell 2000 bounces back from yesterday's drop

-- Influential weakness in the information technology sector

-- Semblance of the so-called reflation trade

The markets have a choppy session

Stock were mixed on Tuesday as weakness in "defensive" sectors such as Tech offset moves higher in pro-cyclical areas that came alongside a move up in yields for 10-year U.S. Treasuries. A continued march higher in yields, combined with lofty valuations, has come along with increasingly optimistic recovery expectations, good news on vaccines, the potential for another $4T in stimulus and an ultra-accommodative Fed. Hence, more choppy action looks to be on tap for April as the market mulls the various cross-currents.

ECONOMIC EVENTS: In the U.S., the Conference Board consumer confidence index surged 19.3 points in March to its highest reading in a year and now stands at 109.7, up from 90.4 in February. The FHFA home price index rose 1.0% in January to 316.7, hitting another new high. The S&P Case/Shiller 20-city home price index rose 0.9% to 243.0 in January.

TOP NEWS: In COVID-19 news, BioNTech ($BNTX) and Pfizer ($PFE) announced that they expect to increase manufacturing capacity for BNT162b2 - their joint COVID-19 vaccine - to up to 2.5B doses by the end of 2021. The increase is driven by the optimization of production processes, the recent initiation of production at BioNTech's Marburg, Germany facility, regulatory approval for six dose vials, and the expansion of the manufacturing and supplier network, said the companies, which added that further measures and discussions with potential partners to continue to expand the manufacturing capacity and network are ongoing.

Bitcoin jumped back above $59,000 earlier today after recent news that Visa ($V) will allow USD Coin, another cryptocurrency, on its payment network and this morning's announcement that PayPal ($PYPL) will allow U.S. consumers to use their cryptocurrency holdings to pay at millions of its online merchants.

In M&A news, Spotify has acquired Betty Labs, the creators of Locker Room, a live audio app "that's changing the way insiders and fans talk about sports." Additionally, DraftKings ($DKNG) announced that it has acquired Vegas Sports Information Network, which it said will enable the company "to further build out its content capabilities and will augment VSiN's ability to broaden their audience alongside the expansion of legal sports betting in the U.S."

Meanwhile, the Federal Trade Commission has filed an administrative complaint and authorized a federal court lawsuit to block Illumina's ($ILMN) $7.1B proposed acquisition of Grail - a maker of a non-invasive, early detection liquid biopsy test that can screen for multiple types of cancer in asymptomatic patients at very early stages using DNA sequencing. In its complaint, the FTC said that as "the only viable supplier of a critical input, Illumina can raise prices charged to Grail competitors for NGS instruments and consumables; impede Grail competitors' research and development efforts; or refuse or delay executing license agreements that all MCED test developers need to distribute their tests to third-party laboratories." In response, Illumina announced that it disagrees with, and will oppose, the FTC's challenge and will pursue its right to proceed with the transaction.

MAJOR MOVERS: Among the noteworthy gainers was DXC Technology ($DXC), which rose 9.1% after Deutsche Bank analyst Bryan Keane upgraded the stock to Buy from Hold with a price target of $44, up from $28. Also higher was American Airlines ($AAL), which gained 5.3% after Jefferies analyst Sheila Kahyaoglu upgraded shares to Hold from Underperform with a price target of $25, up from $15.

Among the notable losers was Wave Life Sciences ($WVE), which dropped almost 16% after the company's Phase 1b/2a Huntington's disease trial failed on efficacy. Also lower was Canoo ($GOEV), which fell 21.2% and was downgraded to Neutral by Roth Capital analyst Craig Irwin after the EV startup reported its first quarterly results post SPAC-IPO.

Reviewing Tuesday's economic data:

  • The Conference Board's Consumer Confidence Index jumped to 109.7 in March ( consensus 97.0) from a downwardly revised 90.4 (from 91.3) in February.
    • The key takeaway from the report is that the series reached its highest level in a year on improved expectations for a further recovery.
  • The FHFA Housing Price Index increased 1.0% m/m in January following an upwardly revised 1.2% increase in December (from 1.1%).
  • The S&P Case-Shiller Home Price Index increased 11.1% y/yr in January ( consensus 11.0%) following an upwardly revised 10.2% increase in December (from 10.1%).

  • Russell 2000 +11.2% YTD
  • Dow Jones Industrial Average +8.0% YTD
  • S&P 500 +5.4% YTD
  • Nasdaq Composite +1.2% YTD

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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