Closing Stock Market Summary
Like yesterday, relative strength in the mega cap stocks propelled the major indices to close with gains. The Vanguard Mega Cap Growth ETF (MGK) climbed 1.0%, the Nasdaq Composite rose 0.9%, and the market-cap weighted S&P 500 rose 0.2%.
The broader market saw some selling activity, but remained resilient overall. The equal weighted S&P 500 declined only 0.2%.
A drop in market rates, short-covering activity, and/or a fear of missing out on further gains in this seasonally strong period for the market presumably acted as support for equities.
The 2-yr note yield fell two basis points to 4.92% and the 10-yr note yield fell nine basis points to 4.57%. These moves follow a decent 3-yr note auction, along with some weak economic data for September out of Europe that featured a 1.4% month-over-month decline in industrial production in Germany and a 12.4% year-over-year decline in PPI for the eurozone.
Notably, the rate-sensitive utilities (-0.7%) and real estate (-0.9%) sectors still declined today despite the drop in yields. The materials (-1.9%) and energy (-2.2%) sectors were also some of the worst performers. The latter was sliding alongside oil prices ($77.33/bbl, -3.77, -4.7%), which appeared to be reacting to growth concerns more so than geopolitical angst.
The consumer discretionary (+1.2%), information technology (+1.1%), and communication services (+0.6%) sectors closed at the top of the leaderboard, benefitting from gains in mega cap components.
Growth stocks were another source of support for the broader market, drafting off the big move in cloud applications provider Datadog (DDOG 102.20, +22.65, +28.5%) following its earnings report.
On a related note, Uber (UBER 49.92, +1.78, +3.7%) and NXP Semi (NXPI 185.80, +3.00,+ 1.6%) were standout winners after reporting earnings.
- Nasdaq Composite: +30.3% YTD
- S&P 500: +14.0% YTD
- Dow Jones Industrial Average: +3.0% YTD
- S&P Midcap 400: +0.7% YTD
- Russell 2000: -1.6% YTD
Reviewing today's economic data:
- September Trade Balance -$61.5 bln ( consensus -$60.1 bln); Prior was revised to -$58.7 bln from -$58.3 bln
- The key takeaway from the report is that there was strength in% both imports and exports in September, demonstrating the continued strength of the U.S. economy and the appeal of U.S. goods abroad at a time of softening global demand.
- Consumer credit increased by $9.0 bln in September (consensus $9.0 bln) after decreasing a downwardly revised $15.8 bln (from -$15.6 bln) in August.
- The key takeaway from the report is that tighter lending standards and reduced borrowing needs in the face of higher interest rates have slowed the pace of credit expansion, particularly for nonrevolving deb.
Wednesday's economic calendar features:
- 7:00 ET: Weekly MBA Mortgage Index (prior -2.1%)
- 10:00 ET: September Wholesale Inventories ( consensus 0.0%; prior -0.1%)
- 10:30 ET: Weekly crude oil inventories (prior +0.774 mln)