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End of Day Briefing - Recap of Thursday Nov. 19, 2020

Market closes higher in quiet advance

Dow +44.81 at 29483.17, Nasdaq +103.11 at 11904.63, S&P +14.08 at 3581.87

[BRIEFING.COM] The S&P 500 increased 0.4% on Thursday and overcame a sluggish start as buyers quietly eased their way back into the market. The Nasdaq Composite (+0.9%) and Russell 2000 (+0.8%) outperformed while the Dow Jones Industrial Average increased just 0.2%.

For most of the day, the S&P 500 floated around its flat line, while the Nasdaq narrowed the monthly performance gap between it and the benchmark index amid strength in technology stocks. The S&P 500 information technology sector rose 0.8%, but the energy sector (+1.5%) advanced the most as the gains started to broaden out in the afternoon.

The market appeared to get a small bump after Senate Minority Leader Schumer reportedly said Senate Majority Leader McConnell agreed to restart stimulus talks. Not the most surprising news since Mr. McConnell previously said he wanted a smaller deal before year-end, but good news, nonetheless.

The utilities (-1.0%) and health care (-0.1%) sectors, which have underperformed this week, failed to participate in today's advance.

In other positive developments, Phase 2 vaccine trial data from the AstraZeneca ($AZN 54.03, +0.04, +0.1%)/Oxford collaboration showed encouraging immune responses in older patients, and October existing home sales increased at a faster-than-expected, seasonally adjusted annual rate of 6.85 million ( consensus 6.49 million). Market reactions were muted, but these were good for sentiment reasons.

The Philadelphia Semiconductor Index (+1.6%) was another pocket of strength today. NVIDIA ($NVDA 537.61, +0.46, +0.1%) beat top and bottom-line estimates and issued upside Q4 revenue guidance; Cree ($CREE) 81.00, +8.39, +11.6%) was upgraded to Overweight from Neutral at JP Morgan with a $90 price target.

Longer-dated Treasuries increased again, pushing yields even lower from last week's highs. The 2-yr yield was flat at 0.17%, and the 10-yr yield decreased three basis points to 0.85%. The U.S. Dollar Index decreased 0.1% to 92.27. WTI crude futures decreased 0.1% to $41.75/BBL.

Reviewing Thursday's economic data:

  • Initial claims for the week ending November 14 rose by 31,000 to 742,000 ( consensus 720,000). Continuing claims for the week ending November 7 decreased by 429,000 to 6.372 million.
    • The key takeaway from the report is that it covers the period in which the survey for the November employment report is conducted. The jump in initial claims, which are still exceedingly high, will contribute to expectations for a slowdown in job growth in November.
  • Existing home sales increased 4.3% m/m in October to a seasonally adjusted annual rate of 6.85 million ( consensus 6.49 million). October marked the fifth consecutive month of positive sales gains.
    • The key takeaway from the report is that it reflects robust demand for existing homes. That is constraining supply even further, which is going to be a pressure point that feeds higher prices, shuts out an increasing number of first-time buyers, and bolsters the prospects for new home sales.
  • The Conference Board's Leading Economic Index increased 0.7% m/m in October, as expected, marking the sixth straight month of positive readings. The index for September was unrevised at +0.7%.
    • The key takeaway from the report is that strength has become more widespread among the leading indicators.
  • The Philadelphia Fed Index decreased to 26.3 in November ( consensus 25.0) from 32.3 in October.

Investors will not receive any notable economic data on Friday.

  • Nasdaq Composite +32.7% YTD
  • S&P 500 +10.9% YTD
  • Russell 2000 +6.9% YTD
  • Dow Jones Industrial Average +3.3% YTD

Market Snapshot

SP 5003581.87+14.08(0.39%)
10-yr Note +2/320.848
NYSEAdv 1940 Dec 1080 Vol 884.5 mln
NasdaqAdv 2243 Dec 1205 Vol 5.2 bln

Industry Watch

Strong: Information Technology, Energy
Weak: Utilities, Health Care

Moving the Market

-- Quiet advance for the major indices, energy and tech stocks outperformed

-- Stimulus talks reportedly resumed

-- Encouraging vaccine news, housing data, earnings reports

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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