Closing Stock Market SummaryThe S&P 500 (+0.01%) finished little changed on Friday after being up as much as 0.9% early in the day. The Dow Jones Industrial Average outperformed with a 0.4% gain, while the Nasdaq Composite (-0.4%) and Russell 2000 (-0.3%) slipped into negative territory as selling picked up into the close on no specific news.
The strong start was mainly attributed to news that Pfizer (PFE 37.96, +1.41, +3.9%) may file for emergency use authorization for its COVID-19 vaccine by the end of November, and retail sales increasing 1.9% m/m in September (Briefing.com consensus +0.6%). The retail sales data had overshadowed an unexpected 0.6% decline in industrial production for September (Briefing.com consensus +0.6%).
Fittingly, the health care sector (+1.0%) was among today's sector leaders, right behind utilities (+1.1%). The consumer discretionary sector (-1.0%), however, really took a hit during the last hour of trading amid broad-based selling, joining the information technology (-0.3%) and real estate (-0.4%) sectors in the red.
The energy sector (-2.3%) and Dow Jones Transportation Average (-1.3%) were consistent laggards today amid disappointing reactions to mixed earnings reports from Schlumberger (SLB 14.97, -1.45, -8.8%), J.B. Hunt Transport (JBHT 128.04, -13.80, -9.7%), and Kansas City Southern (KSU 179.01, -5.00, -2.7%).
The weakness in the transportation space was mitigated in the industrials sector (+0.7%) by nice gains in Boeing (BA 167.35, +3.11, +1.9%) and Caterpillar (CAT 168.75, +3.71, +2.3%). Boeing's 737 MAX was deemed safe to fly by EU regulators, and CAT was upgraded to Overweight from Equal Weight at Wells Fargo.
Evidently, the session was mixed with conflicting trading narratives that made it hard to identify a clear theme. It was a stock picker's kind of day and certainly one for options traders amid monthly options expiration activity.
U.S. Treasuries finished the session on a lower note. The 2-yr yield increased two basis points to 0.15%, and the 10-yr yield increased one basis point to 0.74%. The U.S. Dollar Index declined 0.2% to 93.71. WTI crude futures declined 0.3%, or $0.11, to $40.85/bbl.
Reviewing Friday's economic data, which featured Retail Sales for September:
- Total retail sales increased 1.9% m/m in September (Briefing.com consensus +0.6%). Excluding autos, retail sales were up 1.5% m/m (Briefing.com consensus +0.3%). On a yr/yr basis, total retail sales were up 5.4%. Excluding autos, they were up 4.0%.
- The key takeaway from the report is that the sales gains were broad based and driven by increases in discretionary categories, which will validate expectations for a huge rebound in GDP growth in the third quarter.
- Industrial production declined 0.6% m/m in September, which was well below expectations (consensus +0.6%). Total capacity utilization of 71.5% also disappointed (consensus 71.9%).
- The key takeaway from the report is that it defied the rebound momentum that had been building in the third quarter. It was the first decline in five months, but despite the September decline, industrial production increased at an annual rate of 39.8% for the third quarter.
- The preliminary University of Michigan's Index of Consumer Sentiment for October checked in at 81.2 (consensus 82.0). That was a bit weaker than expected, but an improvement from the final September reading of 80.4.
- The key takeaway from the report is that concerns about current conditions, which were linked to slowing employment growth, a pickup in COVID-19 infections, and the lack of additional stimulus, were offset mostly by an improvement in attitudes about prospects for the year ahead.
- The Treasury Budget showed a $200.1 bln deficit in August. The budget data is not seasonally adjusted, so the August deficit cannot be compared to the July deficit of $63.0 bln. The deficit in August 2019 was $200.3 bln.
- The key takeaway from the report is that while outlays and receipts showed little yr/yr change in August, the year-to-date deficit climbed above $3 trillion.
- Business inventories increased 0.1% in August (consensus 0.4%) following a 0.1% increase in July.
Looking ahead, investors will receive the NAHB Housing Market Index for October on Monday.
- Nasdaq Composite +30.1% YTD
- S&P 500 +7.8% YTD
- Dow Jones Industrial Average +0.2% YTD
- Russell 2000 -2.1% YTD