Closing Stock Market SummaryThe S&P 500 increased 0.2% on Wednesday amid a calmer Treasury market, although the benchmark index was up 0.8% at session highs. The Dow Jones Industrial Average increased 0.3% while the Nasdaq Composite (-0.2%) and Russell 2000 (-0.2%) coughed up gains and closed lower.
The Treasury market stubbornly resisted buying interest, but at least yields were kept in check: the 10-yr yield increased one basis point to 1.54% (below yesterday's high of 1.56%) while the 2-yr yield decreased one basis point to 0.29%. The U.S. Dollar Index rose 0.7% to 94.41, signaling a defensive undertone.
Likewise, the defensive-oriented utilities (+1.3%), consumer staples (+0.9%), health care (+0.8%), and real estate (+0.7%) sectors were today's leaders in the S&P 500. The materials (-0.2%), communication services (-0.2%), and information technology (-0.1%) sectors closed lower. The latter two groups were influential laggards.
The semiconductor stocks held back the technology sector after Micron (MU 71.64, -1.46, -2.0%) issued downside guidance for its fiscal first quarter due to ongoing supply chain disruptions. The Philadelphia Semiconductor Index declined 1.5%.
Micron wasn't the only company that lowered expectations. Sherwin-Williams (SHW 282.26, +2.64, +0.9%) reduced its Q3 and FY21 guidance, citing worsening raw material availability and pricing inflation, and Generac (GNRC 406.53, -18.81, -4.4%) issued downside FY21 revenue guidance. SHW closed higher despite the bad news.
Dollar Tree (DLTR 100.51, +14.23, +16.5%) was a prime example of "pricing inflation" with an announcement that it will start selling certain items for $1.25 to $1.50. DLTR shares rallied 16.5%, further supported by plans to increase its share buyback program to $2.5 billion.
Boeing (BA 225.36, +6.95, +3.2%), meanwhile, helped lead the Dow higher after the stock was upgraded to Outperform from Mkt Perform at Bernstein. The firm believes global travel is reaching an inflection point.
Elsewhere, WTI crude futures fell 0.5%, or $0.38, to $74.91/bbl amid an unexpected build in weekly crude inventories (4.58 million). Silver futures fell 4.3%, or $0.97, to $21.49/ozt amid the stronger dollar.
Reviewing Wednesday's economic data:
- Pending home sales jumped 8.1% m/m in August (consensus 1.0%) following a revised 2.0% decline (from -1.8%) in July.
- The weekly MBA Mortgage Applications Index decreased 1.1% following a 4.9% increase in the prior week.
- Weekly crude oil inventories increased by 4.58 mln barrels after decreasing by 3.48 mln barrels during the previous week.
Looking ahead, investors will receive the weekly Initial and Continuing Claims report, the third estimate for Q2 GDP, and the Chicago PMI for September on Thursday.
- S&P 500 +16.1% YTD
- Russell 2000 +12.7% YTD
- Nasdaq Composite +12.6% YTD
- Dow Jones Industrial Average +12.4% YTD