Closing Stock Market SummaryThe S&P 500 declined 0.3% on Tuesday in a tight-ranged session. The mega-cap stocks had a strong outing that fueled the outperformance of the Nasdaq Composite (+0.6%), while many of the value/cyclical stocks dragged on the Dow Jones Industrial Average (-0.8%) and Russell 2000 (-0.9%).
New macro developments were lacking, and earnings reactions were generally disappointing, leaving investors grappling with the same growth/coronavirus concerns that were attributed to yesterday's retreat. The key difference today was that these concerns were manifested in a more constructive way: decent gains in the mega-caps.
Accordingly, the S&P 500 consumer discretionary (+0.6%), communication services (+0.6%), and information technology (+0.5%) sectors finished in positive territory. Microsoft (MSFT 213.25, +3.17, +1.5%) provided support for the tech sector ahead of its earnings report after the close.
No other sector within the benchmark index closed higher, and the cyclical industrials (-2.2%), financials (-1.9%), energy (-1.4%), and materials (-1.0%) sectors declined at least 1.0%.
Caterpillar (CAT 157.91, -5.29, -3.2%) and 3M (MMM 161.04, -5.12, -3.1%) were notable drags on the industrials sector after the companies refrained from providing guidance. Health care companies Pfizer (PFE 37.42, -0.50, -1.3%), Merck (MRK 77.99, -0.85, -1.1%), and Eli Lilly (LLY 131.90, -23.29, -5.6%) issued in-line/upside guidance, but shares still closed lower.
Separately, Xilinx (XLNX 124.35, +9.80, +8.6%) agreed to be acquired by Adv. Micro Devices (AMD 78.88, -3.35, -4.1%) in an all-stock transaction valued at $35 billion. Exact Sciences (EXAS 131.12, +24.22, +23.0%) said it will acquire Thrive for up to $2.15 billion in cash and stock.
U.S. Treasuries padded recent gains, pushing yields lower across the curve. The 2-yr yield declined one basis point to 0.15%, and the 10-yr yield declined two basis points to 0.78%. The U.S. Dollar Index decreased 0.1% to 92.96. WTI crude futures rebounded 2.5%, or $0.97, to $39.55/bbl.
Reviewing Tuesday's economic data:
- Total durable orders increased 1.9% m/m in September (consensus +0.7%) following a downwardly revised 0.4% increase (from 0.5%) in August. Excluding transportation, durable orders rose 0.8% m/m (consensus +0.4%) on top of an upwardly revised 1.0% increase (from 0.7%) in August.
- The key takeaway from the report is that business spending continued to rebound, evidenced by the fifth consecutive increase in nondefense capital goods orders, excluding aircraft, which jumped 1.0% after increasing 2.1% in August.
- The Conference Board's Consumer Confidence Index slipped to 100.9 in October (consensus 101.9) from a downwardly revised 101.3 (from 101.8) in September.
- The key takeaway from the report is that consumers are feeling less confident about the short-term outlook, as the rise in coronavirus cases and still-high unemployment levels have contributed to concerns about job prospects.
- The FHFA Housing Price Index for October increased 1.5% (consensus 0.8%).
- The S&P Case-Shiller Home Price Index for August increased 5.2% (Briefing.com consensus 3.8%).
Looking ahead, investors will receive the weekly MBA Mortgage Applications Index on Wednesday.
- Nasdaq Composite +27.4% YTD
- S&P 500 +5.0% YTD
- Dow Jones Industrial Average -3.8% YTD
- Russell 2000 -4.7% YTD