Closing Stock Market SummaryThe S&P 500 declined 0.5% on Tuesday in a cool-down session following its recent record-setting run. The Nasdaq Composite (-0.2%) and Dow Jones Industrial Average (-0.6%) also closed modestly lower, while the Russell 2000 (+0.4%) closed at a fresh record high.
The market struggled out of the gate after October Retail Sales were softer than expected with total retail sales up 0.3% m/m (Briefing.com consensus +0.5%). A pullback in October discretionary spending may have contributed to the negative reactions to better-than-expected Q3 earnings reports from Walmart (WMT 149.37, -3.07, -2.0%) and Home Depot (HD 272.47, -7.10, -2.5%)
For the most part, losses were kept in check. The S&P 500 utilities sector strayed from the pack with a 2.0% decline, but no other sector fell more than 0.8%. The energy (+0.5%) and real estate (+0.1%) sectors eked out gains.
Coincidentally, today's low in the S&P 500 (-1.1%) came right before the NAHB Housing Market Index for November was released at 10:00 a.m. ET, which showed homebuilding sentiment hit a new all-time high. Similarly, sentiment among fund managers was indicated to be extremely bullish, according to a survey done by Bank of America.
The heightened level of bullishness among fund managers perhaps served as a contrarian signal for investors to remain cautious, especially given the market's recent gains. Prior to today, the S&P 500 was up 10.9% over the last 11 trading sessions.
Separately, shares of Tesla (TSLA 441.61, +33.53, +8.2%) rose 8% on news that it'll join the S&P 500 on Dec. 21. Walgreens Boots Alliance (WBA 39.86, -4.25, -9.6%) and other drug store stocks sold off following the launch of Amazon's (AMZN 3135.66, +4.60, +0.2%) online pharmacy business.
U.S. Treasuries ended the session with small gains, pushing yields lower. The 2-yr yield decreased two basis points to 0.16%, and the 10-yr yield decreased three basis points to 0.87%. The U.S. Dollar Index decreased 0.2% to 92.44. WTI crude futures increased 0.2% to $41.43/bbl.
Reviewing Tuesday's big batch of data, which featured Retail Sales for October:
- October Retail Sales were softer than expected with total retail sales up 0.3% m/m ( consensus +0.5%) and sales, excluding autos, up 0.2% (consensus +0.6%). September retail sales growth was revised down to 1.6% from 1.9%. Excluding autos, it was revised to 1.2% from 1.5%.
- The key takeaway from the report is that it showed a pullback in spending across several discretionary categories like clothing (-4.2% m/m), general merchandise stores (-1.1%), furniture and home furnishing stores (-0.4% m/m), and food services and drinking places (-0.1% m/m).
- Industrial production increased 1.1% m/m in October (Briefing.com consensus +0.9%) on top of an upwardly revised 0.4% decline (from -0.6%) in September. The capacity utilization rate hit 72.8% ( consensus 72.3%) following an upwardly revised 72.0% (from 71.5%) in September.
- The key takeaway from the report is that industrial production has recovered most of the 16.5% decline seen from February to April, although output is still 5.6% below its pre-pandemic February level.
- The NAHB Housing Market Index increased to a new all-time high of 90 in November ( consensus 85) following the previous all-time high of 85 in October.
- Business inventories increased 0.7% in September (consensus +0.5%) following an unrevised 0.3% increase in August.
- Import prices decreased 0.1% in October; and prices excluding oil increased 0.1%. Export prices increased 0.2% in October; and prices excluding agriculture were unchanged.
Looking ahead, investors will receive Housing Starts and Building Permits for October and the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +32.6% YTD
- S&P 500 +11.7% YTD
- Russell 2000 +7.4% YTD
- Dow Jones Industrial Average +4.4% YTD