Closing Stock Market SummaryThe S&P 500 increased 0.2% on Tuesday, setting new closing and intraday highs for the first time since February in the process. The Nasdaq Composite also set new highs with a 0.7% gain, but the Dow Jones Industrial Average (-0.2%) and Russell 2000 (-1.0%) finished in negative territory.
The new highs were reached shortly after the open on the heels of blowout earnings reports from Walmart (WMT 134.71, -0.89, -0.7%) and Home Depot (HD 285.00, -3.24, -1.1%), better-than-expected housing starts and building permits data for July, and continued upwards momentum in mega-cap stocks like Amazon (AMZN 3312.49, +130.08, +4.1%).
In sell-the-news fashion, the S&P 500, including WMT and HD, quickly descended into negative territory. An intraday rebound, however, did give the S&P 500 an incremental new high in the afternoon as investors gravitated toward mega-cap stocks within the consumer discretionary (+1.5%), communication services (+1.1%), and information technology (+0.4%) sectors.
Conversely, investors generally avoided small-caps and value-oriented stocks within the energy (-1.7%), financials (-0.7%), utilities (-0.5%), and industrials (-0.5%) sectors. Interestingly, the Dow (-0.2%) was a better representation of today's action, as declining issues did outnumber advancing issues at the NYSE and Nasdaq.
Separately, Politico reported that Senate Republicans are aiming to introduce a smaller stimulus package that will provide $300/week in enhanced unemployment, money for the USPS, and more money for small businesses. Additional fiscal support would provide investors some confidence in the large retailers sustaining their strong performances.
In other corporate news, Oracle (ORCL 55.18, +1.19, +2.2%) reportedly joined the list of companies trying to acquire TikTok US. Kohl's (KSS 20.01, -3.44, -14.7%) said it experienced a softer back-to-school selling season. Teva Pharma (TEVA 10.48, -1.11, -9.6%) is reportedly being sued by the U.S. government over alleged kickbacks violating the False Claims Act.
U.S. Treasuries finished the session slightly higher. The 2-yr yield declined one basis point to 0.14%, and the 10-yr yield declined one basis point to 0.67%. The U.S. Dollar Index fell another 0.6% to 92.30, which benefited gold futures ($2013.2/ozt, +14.50, +0.7%). WTI crude futures declined 0.2%, or $0.09, to $42.80/bbl.
Reviewing Tuesday's economic data:
- Total housing starts surged 22.6% m/m in July to a seasonally adjusted annual rate of 1.496 million units ( consensus 1.230 million) from an upwardly revised 1.220 million (from 1.186 million) in June. Building permits soared 18.8% m/m to 1.495 million (consensus 1.332 million) from an unrevised 1.258 million in June.
- Multi-unit starts and permits drove the positive surprises, yet the key takeaway is that there was also strength in single unit starts (+8.2% m/m) and permits (+17.0% m/m), which is a reflection of strong housing demand.
Looking ahead, investors will receive the FOMC Minutes from the July 28-29 meeting and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +25.0% YTD
- S&P 500 +4.9% YTD
- Dow Jones Industrial Average -2.7% YTD
- Russell 2000 -5.9% YTD