>>> Closing Stock Market Summary


Closing Stock Market Summary

The S&P 500 advanced 0.6% on Wednesday, as gains broadened out to many of the cyclical and value-oriented stocks. The Nasdaq Composite increased 0.5% to close at another record high, while the Dow Jones Industrial Average (+1.4%) and Russell 2000 (+1.9%) rose more than 1.0%.  

Investors welcomed reports that lawmakers made progress toward the next coronavirus relief bill, a promising-sounding vaccine update from Novavax (NVAX 173.49, +16.32, +10.4%) on a Phase 1/2 trial for healthy adults ages 18-59, and the ISM Non-Manufacturing Index increasing to 58.1% in July (Briefing.com consensus 55.2%) from 57.1% in June. 

The news fed into the recovery/reopening optimism that lifted the cyclical S&P 500 industrials (+2.0%), materials (+1.5%), and financials (+1.5%) sectors into the top spots today. The big move in Novavax also kept the spirit alive in other momentum trades like in Amazon (AMZN 3205.03, +66.20, +2.1%), which carried the consumer discretionary sector (+1.4%) higher.

Walt Disney (DIS 127.61, +10.32, +8.8%) was the biggest gainer within the Dow, with shares climbing 9% after impressing shareholders with strong subscriber numbers for its streaming platform. The company also reported a surprise quarterly profit.

Laggards were found primarily in the defensive-oriented utilities (-1.3%), real estate (-0.6%), and consumer staples (-0.2%) sectors. Generally, it was also a tough day for growth stocks, except Square (SQ 146.20, +9.37, +6.9%), which rallied to fresh record highs following its earnings report.  

Shares of Teladoc (TDOC 202.01, -47.41, -19.0%) and Livongo Health (LVGO 128.06, -16.47, -11.4%) pulled back sharply after the companies agreed to merge in a $18.5 billion cash-and-stock deal.

U.S. Treasuries retraced a bulk of the moves from Tuesday. The 2-yr yield declined one basis point to 0.11%, while the 10-yr yield increased three basis points to 0.54%. The U.S. Dollar Index fell 0.5% to 92.89. WTI crude futures gained 1.2%, or $0.56, to $42.24/bbl, hitting a five-month high in the process. 

Reviewing Wednesday's economic data:

  • The ISM Non-Manufacturing Index increased to 58.1% in July (consensus 55.2%) from 57.1% in June. This was the third straight monthly improvement and the highest reading for the index since February 2019.
    • The key takeaway from the report is the recognition that the Employment Index fell even as business activity improved some, which suggests a reticence on the part of employers to bring on new employees given the heightened state of uncertainty about the demand outlook.
  • The Trade Balance report for June showed a narrowing of the trade deficit to $50.7 billion (consensus -$49.3 billion) from a downwardly revised $54.8 billion (from -$54.6 billion) in May.
    • The key takeaway from this more dated report is that export and import activity increased in June as economies were reopening following the suppressed activity from March to May.
  • The ADP Employment Change report for July estimated 167,000 jobs were added private-sector payrolls (consensus 1.600 million), which was well below expectations.
  • The June trade balance report showed a deficit of $50.7 billion (consensus -$53.0 billion). The May deficit was revised up to $54.8 billion from $54.6 billion.

Looking ahead, investors will receive the weekly Initial and Continuing Claims report on Thursday.

  • Nasdaq Composite +22.6% YTD
  • S&P 500 +3.0% YTD
  • Dow Jones Industrial Average -4.7% YTD
  • Russell 2000 -7.3% YTD