Closing Stock Market SummaryThe S&P 500 increased 0.3% on Monday, overcoming an early 0.5% decline for its fourth straight gain. The mega-caps did the heavy lifting and drove the outperformance of the Nasdaq Composite (+0.8%). The Dow Jones Industrial Average (-0.1%) and Russell 2000 (+0.1%) finished closer to their flat lines, with the Dow in the red.
Seven of the 11 S&P 500 sectors closed higher, led by the heavily-weighted consumer discretionary (+1.2%), information technology (+0.9%), and communication services (+0.7%) sectors. Conversely, the utilities (-0.7%), health care (-0.7%), consumer staples (-0.5%), and materials (-0.1%) sectors closed lower.
The negative start was attributed to softer-than-expected data out of China (Q3 GDP, industrial production, and fixed asset management), a 1.3% m/m decline in U.S. industrial production for September (Briefing.com consensus +0.2%), and higher interest rates as oil prices broke above $83.00/bbl.
The stock market quickly recouped losses, though, as oil prices and Treasury yields backpedaled from early highs on no specific news. WTI crude futures settled higher by just 0.2%, or $0.18, to $82.44/bbl. The 10-yr yield settled higher by one basis point to 1.58% after flirting with 1.63% intraday.
The retracement in yields was a supportive factor for the growth stocks, especially the mega-caps, which padded gains in the afternoon while the broader market tracked sideways. The Vanguard Mega Cap Growth ETF (MGK 246.21, +2.51) rose 1.0%, while the Invesco S&P 500 Equal Weight ETF (RSP 155.76, +0.06, +0.04%) closed little changed.
Apple (AAPL 146.55, +1.71, +1.2%) seemed to provide an additional boost in the mega-cap trade after unveiling a new MacBook Pro, the third generation of AirPods, and a new subscription tier for Apple Music. AAPL shares rose 1.2% after being up 0.3% right before its product event.
Walt Disney (DIS 171.17, -5.29, -3.0%), however, was an individual drag on the Dow after the stock was downgraded to Equal Weight from Overweight at Barclays. The firm expressed caution in the company achieving its long-term streaming subscription guidance. Disney shares fell 3.0%.
The 2-yr yield increased two basis points to 0.42%. The U.S. Dollar Index was little changed at 93.96.
Reviewing Monday's economic data:
- Total industrial production decreased 1.3% in September (consensus +0.2%) following a downwardly revised 0.1% decline in August (from +0.4%). The capacity utilization rate dropped to 75.2% ( consensus 76.5%) from a downwardly revised 76.2% in August (from 76.4%).
- The key takeaway from the report is that industrial production was weak in September due to the effects of Hurricane Ida and the ongoing semiconductor supply shortage.
- The NAHB Housing Market Index increased to 80 in October (consensus 75) from 76 in September.
Looking ahead, investors will receive Housing Starts and Building Permits for September on Tuesday.
- S&P 500 +19.5% YTD
- Nasdaq Composite +16.6% YTD
- Dow Jones Industrial Average +15.2% YTD
- Russell 2000 +14.8% YTD